Build its credit by opening accounts in the LLC's name and making timely payments.

True, you didn’t have to put up the $20k, but putting up the $20k down payment and utilizing leverage increased your return by $40k, a 200% return on your $20k investment.  

There may be pre-payment penalties from different lenders.

Is the FHA/Low Down Payment type product still the way to go?

This can vary widely.I’m in Texas and it takes 3 weeks to evict for non payment of rent or a lease violation.

@Jacob Hancock-no reason to start with a new build - way too much risk and complexity-start with a house hack with a low down payment loan-if it goes well, do it againgood luck

With the FHA I’ll be putting the money as a 3% down payment and I’ll rent rooms (house hacking) or with the investor I’ll invest the money with a hard money loan going 50/50 with this guy.

From there there's typically a sliding scale pre-payment penalty.

I want to use this equity for a down payment on future value-add projects.  

if you just buy a standard LTR with a conventional mortgage, you'll be break even or negative in most markets, and your down payment will sit there doing nothing.i own a condo in Stamford, and i plan to start doing more in Fairfield County in 2025 when i have more time.