Jay Hinrichs points out in podcast 222 that one should pay off their properties sooner than later, in case something unforeseen/bad happens, you have multiple (good) exit strategies.You can still leverage your properties - you can get a HELOC (actually there is no such thing for investment properties, it's called portfolio line of credit or asset based LOC) and you'll be able to use it in case the need appears, without paying interest all the time.Let me know the conclusion you reach.

If you have a high end rental, you'll have more deposit and tenants will be concerned about having bad credit and won't likely just take off and leave you hanging with repainting. 

You should set up an ideal situation with one like a line of credit with them and then once you have a purchase, go to someone else and refi it. 

Long story short,  here is the deal:-He will give me essentially an interest free line of credit.  

Stick to the things that matter, credit history, eviction history, income verification.

I have a potential tenant lined up that is asking for a copy of their credit report that I pulled.

Almost half of my portfolio has Section 8 tenants in it and as non section 8 people move out i try to move in more Section 8 tenants but i make sure my property manager screens them THOROUGHLY....not with just what's on paper regarding credit report, income and past criminal activity (If any).....I make sure my PM screens to make sure they have no pets, no evictions, no smoking OF ANY KIND and no felonies and we still get TONS of people calling...the biggest problem becomes picking someone from who is left.   

Internet and phone and cable should be in their name so if they don't pay for it, it's not on your credit history. 

Then work on getting some more rentals (maybe even get an asset based line of credit using this paid off property - the note itself will act as a deterrent) and build more wealth before spending time and resources on LLC.Here is another "rule" - the "2% ASSPRO or CYA rule" - the cost of setting up and maintaining your asset protection should be less than 2% of equity you are trying to protect.

This distinction if of course most important when you need to use cash out proceeds to pay down credit cards used for rehab or keep the ball rolling and re invest for more flips/investments.