Hey I've represented commercial multifam landlords and we've never really run into issues with CityFHEPS payments.

I know it is "working fine" for now and there's no issues at this point, but I will be replacing it within the next week. 

All that to say, if you have sufficient evidence that the market is showing the value of the home is different than what the appraisal comes to, then appraisals should not be an issue.

The issue I'm having is that the house doesn't cashflow unless I pay down the PMI and refinance.

The issue with purchasing the property and then transferring the property into an LLC are the added transactional costs.

I always hired contractors, and did material runs for them several times a week after work and cleaned up jobs on the weekend, which was also time I spent at the properties, discovering issues, thinking about the rehabs and what needed to be done next.

Yeah..ok...And all teachers should have kids first...All doctors should have lots of medical issues before they can practice....All dentists should have lot of dental issues before they can practice...Every waiter should owner a restaurant before they can wait tables....Every car salesman should have bought multiple new cars before selling any....I get your point..... it would be great if every realtor had to have real life home ownership under their belt, so they have that BTDT experience..... but not gonna happen

Are there any issues with this strategy? 

There are facebook groups where other Ownwerrez users help each other with issues. 

We  manage inventory , are hospitable and curious with your guests , manage any maintenance issues and prep rooms for the next guests while  insure you obtain or maintain a Superhost status  -- I think that is very a fair tradeoff , If you listing cant afford that 15-18% than maybe that property is not pulling the numbers it ought to be.