Those damn liberals!

My credit is not very good and it is about 660 due to hard pull, low credit history and recent late payment for macy's credit card (only $35 damn!).

I have no outstanding loans to my LLC.

Your attitude under the circumstances is outstanding.

Seems like most of the deal syndicators use the IRR as their advertised return which can be misleading especially if it is based on 2-3 years of interest only loan and then an exit in a certain amount of years at a fixed price which is pretty damn hard to predict what a property is worth, far out into the future. 

Then we'd buy another duplex for around $200k and have an outstanding mortgage of around $1,500 if we went 3% conventional, then refi later on after renovations like we've done with our current residence. 

This is somewhat difficult in RE, because owning 1 place for even 2, 3, 5 years does not provide you a lot of data and takes a damn long time.

I think I overpaid a bit on construction from what I've seen other people pay for a gut rehab (damn Bay Area pricing).

I don't, but I do have an outstanding mortgage broker I could refer you to if you like. 

If they sell the house for $150,000, the outstanding mortgage balance of $65k must be paid off (it makes no difference whether the mortgage is held by Sammy the previous Seller, or Bank of America, or Regions Bank, or Hard Money Joe - the lien must be paid off in order to give free and clear title to the property in a sale.