For pre screening are you simply looking at income, debts, employment etc? 

Now I'm studying CRE finance, investment, and tax strategies aside from my full-time job to better equip myself with the essential financial literacy. 

I was recommended by a fellow tax deed investor H.

However, it may lead to higher monthly payments and increased debt.

@Mickey Petersen I bought this one in Mar 2020 from the local tax sale.

He's offered it to me on a lease-option agreement, with a "purchase price" of $1.2M, "down payment" of $200k and 5% interest only payments on the $1M debt.

I am not sure where the pricing is today as all of my recently originated debt is construction financing which is adjustable and  tied to the fed rate but your broker is not being honest with you if they are saying rates never drop below 7%.As for your desire to complete a BRRRR, the interest rates certainly impact the debt coverage ratio and thus the refinance proceeds.

Same goes for number of LLCs and what to fund them with, since bear in mind that CA tends to be more cumbersome and expensive to have LLCs than other states.California is generally more cumbersome than other states when it comes to taxes and filings.

However your situation becomes a trickier case study since these properties first served as your primary residence which could provide additional benefits form a tax perspective not available to an owner of investment real estate and nobody has a crystal ball and knows the property with certainty will transition into an investment property. 

I've always calculated NOI as gross income minus operating expenses (not debt or cap ex) period.