I have an LLC where I am the sole member, and that LLC is a member of a separate partnership LLC.

My thinking behind these questions is that I want to make sure separate my operating account from cash accumulation that I can then use for more property acquisitions. 

In order to apply for these exceptions, units within a condominium, cooperative, or mutual housing corporation, the association must submit a detailed written and graphic report indicating that the unit’s required fire separation walls fully comply with N.J.A.C. § 5:10-1.4(b)4.

The house has 3 bedroom and 2 bathrooms on the main floor, a separate illegal basement suite with 2 bedrooms 1 bathroom in the basement AND an oversize double garage with a 1 bedroom carriage suite in the backyard.

If the LLC and the property are in separate states, one issue is if you had to go to court, the court wouldn't recognize your LLC's filing since it doesn't exist in that state.Also, remember that CA charges some huge franchise fee, some $700 or $800 annually, which is applied per LLC you form. 

If you are able to buy a single family home, you can rent by the room long-term, or if it has separate living space (basement, mother-in-law sweet, etc.) you can Air Bnb, and likely cover your mortgage and potentially make money while living there, especially in a hot market like Austin.

@Jonathan Bombaci all the tenants are planning on going their separate ways.

Business side has 4 parking spaces separate from the home’s 2 parking spots with room for storage.If the goal is to tear it all down and create a multi family 4plex in its place, what are my first steps to doing a project like this?  

You might run into adequate HVAC capacity and needing to run additional ductwork (then determining a pro-rata billing set up perhaps) or even an additional unit with separate water meter just the same. 

It is not your responsibility to return deposits separately unless spelled out in the lease to do so