Most new investors disregard the most important aspect of Real Estate... location and start walking through places that look like S*it, smell like SH*t, and will most likely have returns like Sh*t, but their spreadsheet says otherwise.   

I think if he pays the mortgage directly from his LLC account, then he is directly using business funds to pay a personal debt.If he pays himself something instead of using an owners draw he is generating ordinary income from his passive income, a double whammy in tax inefficiency.As long as he is a single member LLC, I think he should be able to take the mortgage interest since smllc are disregarded entities for federal tax purposes.

Typically, if the house is owned by an LLC, the proceeds from sale (check or wire, commonly wire) should be going into the LLC bank account.I am not a CPA, so please confirm any of this with your CPA, but most (if not all) sole member LLCs are disregarded entities, so from from a tax perspective it is irrelevant.  

Your SMLLC is probably disregarded so that doesn't matter. 

SM LLC is generally treated as a disregarded entity, which means that the LLC itself does not have to pay taxes, however state taxes may be different.

The only exception to this rule is if you are a LLC solely for asset protection purposes and are treated as a disregarded entity for tax purposes. 

Are these all disregarded LLC’s where you’d probably be sued personally anyway? 

If I remembered that incorrectly, feel free to disregard ;)

There is No tax advantage to an llc....for taxes the llc is disregarded and everything goes directly to your personal tax return.

Disregard how they are managing.