I may consider a traditional value add with a select few sponsors.  

Additionally, the super low down payment and powerful strategy somewhat rationalizes paying more for the property than a traditional homebuyer or investor.

I want to know what is the benefit to obtaining  a property under this type of mortgage vs. doing a traditional conventional mortgage and financing the renovations by other methods (ex: hard money or personal loan). 

Some RE options in order of passivity (IMO) from most active to most passive: New development, Flip, BRRRR, STR without PM, traditional buy and hold without PM, STR with PM, traditional buy and hold with PM, full service turnkey, Commercial MF with PM, Commercial non residential, NNN, syndication, REIT. 

So basically it's not a pure analysis of STRs vs other asset classes but more like traditional residential real estate investments whether long term buy and holds or true STRs.

But I did read and hear that traditional lenders don't like LLCs.

Whether it's traditional rentals, MTRs, or STRs.

Our CPA is encouraging us to contribute max to our Traditional 401k, however I am wondering because this is a pre-tax deduction will this affect our "buying power"/mortgage amount in the future?

On traditional flips, you will normally pay ordinary income tax on any gain upon the sale since this is considered "active income" which means you pay whatever your individual income tax rate is on the profit.When it comes to flipping, there is so much involved from the tax side that you really need to talk to a good CPA that specialized in real estate and pay whatever they want you to to help you time things correctly and structure the deals so that you win. 

I.e. dissolve the LOI and attempt to purchase through traditional method once it hits the housing market.