Eudith mentioned that you can't transfer a purchased a property from your name into an LLC, without possibly triggering a due on sale clause.

Sure beats lurking in the shadows :) Personally I would look to maintain ownership as long as possible (unless I were, say . . . fleeing the state), but I would want to do that while maximizing overall investment ability. 

Also see if you can transfer your property tax basis.If you don’t sell, your insurance costs will eventually climb to 1-2k/month which simply isn’t worth it imo.

You need to live somewhere.... if you can afford a property with rental potential (i.e. option 1), you can get started in home ownership and have your tenant hep you build equity with principal pay down.  

A while back I heard that you could buy a fourplex with and FHA and then after a year somehow role/transfer that FHA onto a triplex and then a duplex and then finally a single family home?

I heard that you could buy a fourplex with and FHA and then after a year somehow role/transfer that FHA onto a triplex and then a duplex and then finally a single family home?

They should prorate any rents and transfer any security deposits on account. 

A real estate attorney advised us not to quit claim deed the property from individual ownership to LLC.

The justification to your wife to raise rents would be that your costs of ownership will continue to rise each year (yearly tax & insurance increases, repair/maintenance/CapEx escalation over time, etc).

@Kayla Johnson Without any experience in remodeling, repairs, maintenance, or home ownership I'd avoid this deal.