I want to know is it more cost effective or easier to purchase the property alone and put it in a mortgage in our name or purchase the LLC from him that holds the property within it.

If I were to approach a seller of a $200k home, and they had a remaining mortgage of $100k, could I get a new bank financed loan for that $100k, and have the seller finance the remaining $100k of equity to me?   

It will depend on Lender if they take Rents from Appraisal (1025) or Rents from your existing Tenants.

They build, you do a standard FHA mortgage at closing once the home is completed. 

My mortgage will be roughly 230-235k.

The tax benefits refer to the tax deductions from mortgage interest and property tax.The returns mainly rely on appreciation, and the cash flow only improves in the last few years, also depending on securing the 5% refinance rate.I've learned a lot from this forum, but as I start to operate on my own, I'm still not completely confident.

Quote from @Erick Pena: A "good" rental property is one that covers all expenses (mortgage, taxes, insurance, maintenance, property management fees, and any other costs) and still leave a surplus (commonly referred to as cash flow).Calculate cash flow as: Cash Flow = Rental Income − Operating Expenses − DebtThere's much more to it, but that's the basic idea.

We had to save up the 5% to get our first place with an 80/15 first and second mortgage.  

Quote from @Drago Stanimirovic: For a single-family rental (SFR) that's free and clear, meaning no mortgage, the acceptable minimum annual cash flow depends on your investment goals, location, and risk tolerance.

Hedgefunds, large buyers, mortgage companies etc.