Open a dedicated business bank account to separate personal and business finances, ensuring compliance and transparency.

Savings: Hold the deposit here so it's separate from operating funds.

I'd have to see your overall layouts but I think you are on the right track. we build 3 story stacked triplexes and it's very efficient so don't be afraid to go up either. anytime you build more than 1 structure costs are much higher but if its just to offset mortgage and you want to be separate then I understand. 

I just used my attorney as our registered agent, PO Box as our business address, and a separate LLC as the holding company. $50/ LLC and it literally takes less than 20 minutes for each LLC and costs less than $20/ yr. to renew each LLC.

For separate entities I use separate files for each entity.

What is the best way that you have found to tell them that you need labor & materials separate, so at tax time you can send them a 1099 for labor?

I would suggest doing these separately however since you will run into issues with a partial release clause on a blanket loan.

You have to separate the two.

They are all on separate parcels, paid off and occupied by long term tenants.

Utilities are OFTEN overlooked so reach out to power, telecom, gas (or go all electric), water, and sewer to make sure you understand what it would take to get separately metered services from the primary house.