We want to stay compliant with any IRS issues and work within the newly created multi-member LLC.

He might  consider  selling to you and saving some funds in his  bank and  using a reverse mortgage to  purchase the proeprty .   2)  for your side -if you need to keep the down payment low - using the  VA loan is a great idea ...already having a VA loan outstanding you might have an issue  using another VA loan . 

This shouldn't be an issue for most DSCR lenders.

Maybe that lender has some sort of weird requirement regarding where the funds need to come from, but typically a HELOC isn't an issue....

One issue i will run into is funding since alot of dscr loans do not fund in rural areas. 

A full-time position just hasn’t come my way yet.I recognize that in theory, monthly mortgage payments shouldn’t be an issue since I’ll be househacking, I would just rather comfortably afford the mortgage if everyone somehow decides to move out at one time.

Of course they have no issue with selling the liens and collecting money from investors, they also have no issues with charging a premium that is non refundable and the county keeping the money.  

As a buyer and you use a hard money loan to purchase and rehab a home the lender should issue a 1098 just as any other mortgage lender holding claim to the title correct?  

Keep in mind that you'll have unique issues with it that WILL have to be addressed at some point if they haven't already...

The process was straightforward, and I didn't run into any issues.