I have had both occur.

If you think you will go FHA, Conventional, 203k, etc. and then Quit Claim the property, to a LLC, or a Land Trust you run the risk of the lender discovering a Title Transfer occurred and activating the "Acceleration Clause" or "Due on Sale Clause" that requires the loan to be paid in full, within 'x' number of days.

I might ask that some of the proceeds of the sale be held in escrow to provide a security deposit and specify that the house be left in broom clean condition and that you were responsible for any damage that occurred during your tenancy.

I'd personally be questioning the choice of my property manager if a situation like this occurred.

There's a local meetup that occurs every 3rd Tuesday of the month and there you will find lots of phenomenal people that you can network with.

While investing you must see that some real estate projects needs funds for development and its distribution may not occur for several years.

My ego does not want me to give it back and there by take a 3000 loss but my family and best friends say call it a day, return the money to the guy and suck it up as it is known that he is a scumbag who knows my address and may harm me or my family.Others ask me to stand my ground as he may hold the grudge either way.Need some expert, practical advise please.

It's true that when you start out with it you'll see returns of around 10% or more, but inevitably your returns go down over time as defaults start to occur on your loans.  

My thoughts would be that at some point I might want to see the property so if we could limit the capital gains this would help but I am not sure of any harm this strategy would cause.When seeking out a tax professional do I need to focus on somebody in my state or are CPA's well versed enough to be able to operate over party lines.Lastly, are the only real advantages of using an LLC the benefit of limiting your liability to your business only.

Consider also how vacancies that will occur while you are increasing rents will impact your cash reserves.