I intend on being a hybrid investor, as I do have a private lender who is interested in putting in $100,000 for 20% of the profits.Now my question is, which corporation of ownership would be most ideal for multifamily and small apartment properties?

You might also consider purchasing a franchise store.Or you may use creative financing to work a no money down payment deal for a business in exchange for a share of profits/ ownership in the future after you develop it.But do your due diligence as always 

Should I be sending letter to the current tenants about the change of ownership, what do you do to set the tone for your tenants such as sending out rules and guide lines.

The best way to jump into buy and hold ownership is to target an owner occupied multi family home with an FHA loan - which means only 3.5% down payment.

Not having any luck on the 2nd mortgage note.If I purchase the 1st, can I foreclose the property and take ownership?

A key component in reaching that middle ground is responsible ownership.  

Most plans allow you to borrow $50k or 50%, whichever is lower and pay back over 5 years.I believe 401k also has much better benefits for property ownership if you are leveraging.

When an entry level home goes from being 300k+ to being only ~100k the dream of home ownership becomes orders more feasible.If you're determined to stay, Justin gives good advice.  

If he relinquishes ownership in LLC is he still libel?

The best way to jump into buy and hold ownership is to target an owner occupied multi family home with an FHA loan - which means only 3.5% down payment.