Especially for first time or entry level homebuyers...what is the point of 3% down if buyers will require another 2-3% out of pocket to cover their broker's fee? 

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

There is likely to be high levels of interest and competition.

That income sounds low for Sedona. 

Taxation is at the individual level.  

Having 10 low value properties within a single LLC might make sense while having a single LLC dedicated to an expensive asset may also make sense.

Invest using tax-advantaged accounts when possible.Tax-advantaged accounts generally don't generate capital gains taxes federally, and generally not at the state level although individual state rules may apply.

Many investors don’t feel comfortable submitting low offers on homes listed on the open market (MLS).

That would have taken the issue to a whole new level.

It is a 3 bedroom ranch on the main level with a bigger kitchen and LR than most 3 BR ranches in the area.