It sounds like you are investigating the DSCR route due to lack of investment funds. 

.: Hello,I'm new to tax/mortgage surplus funds retrievals, and have been in contact with a homeowner who is willing to work with me.

Same goes for number of LLCs and what to fund them with, since bear in mind that CA tends to be more cumbersome and expensive to have LLCs than other states.California is generally more cumbersome than other states when it comes to taxes and filings.

My plan was to keep the condo as my residence, but after a year, refinance to fund a down payment on a multi-family property, either out of state or in the surrounding NY area.

I have some funds in my 401(k), and I'm considering whether I should cash out some of them to help with the purchase.

Combine these benefits with GI Bill-funded real estate education to expand your knowledge.This post does not create a CPA-Client relationship.

Depending on the ARV some are even able to get out all the funds they used to quickly rinse and repeat

I'm really busy with my w2 job working all the time to fund my investments. 

If the answer is yes, then it's a no brainer to make minimum payments on your 2.8% interest rate mortgage, and use the funds that you would have paid extra to pay it down faster, to either invest in more real estate, the market, or anywhere else where you can get a ROI > 2.8%.If the answer is no, then feel free to aggressively pay it down as fast as possible, to become debt-free faster, and just have a large amount of money in savings or to splurge with.The bottom line is that your 2.8% mortgage is GOOD debt.

A 1031 exchange doesn’t apply, but funding through a self-directed IRA can defer taxes, though profits from debt financing may trigger UBIT.To reduce taxes, consider forming an LLC for better expense deductions, offsetting gains with investment losses, or holding the property for 12+ months to qualify for lower long-term capital gains rates.This post does not create a CPA-Client relationship.