While it is in an LLC, you still are guaranteeing the note so your credit worthiness is important.As far as personal bank statement's, the cash out proceeds should be sufficient for reserves so I am not sure why they are asking for personal statements, unless rent receipt is deposited into your personal accounts. 

Living completely debt free, will not do any of these things and can in fact, lower your credit worthiness.

Instead, the holdco will be in operation the longest so it should be the most credit worthy and I could get financing and just pump the capital down into one of the subs.

Often you have an experienced flipper (other other REI) that partners with several different people that provide the PG and creditworthiness to get loans, and also usually the down payment and closing costs.

We always used fannie mae income guidelines which made a simple reference in my written operations guidelines. 33 to 38% of gross income, credit worthy, income received for the last 2 years, exceptions made for past employment when moving into a new area figured at min. wage.

There is no substitute for knowing the credit worthiness of a tenant.

The work to find new, credit-worthy tenants and the work to get the home ready again...jeez, even just switching the utilities can be a pain.

That should work for your downpayment and credit worthiness.  

My goal was; principal pay down, reestablishing credit worthiness for a possible refinance and to give her the opportunity to pay more than the $150.00 per month with the motivation that any extra payments it went straight to paying down the principal.

The loan is based on credit worthiness and cash flow and normally require 20% down.Cheers!