The Corp reports it as a sale of the property held long term and then the distribution of it as well. 

These are generally referred to as "turn-key" and there are lots for sale.  

Me personally, I would be tempted to put up for sale as-is for what you bought it for and walk away after a certain time as you will then incur other expenses.  

Look into tax sales and liens.

@Darius Moezinia Refinance right after the completion of a 1031 is perfectly acceptable and is a frequently used strategy when cash is desired by the exchangor who does not want to create a taxable boot situation by taking cash or be seen as inappropriately accessing profit by a refinance immediately before a sale that begins a 1031.

There are a lot of properties for sale - if you have the down payment, this should not be so difficult for you. 

The bank has agreed to do a short sale of 189k.

Sometimes in a land contact sale the deed will be signed by the owner and will be held in escrow until the buyer satisfies the terms of the land contract.

I'm a sales analyst from Columbus, Ohio and am currently learning all I can about small multifamily investing toward the goal of creating a house hack for my family by summer 2017.  

My primary thought for involvement with the LLC was to get access to sellers who would not qualify for investor deal, but may be interested in short sale listing (which must be done with the agent for bank to consider it), or some other solution.