There is tons of opportunity in the $300-800K range and doing a couple smaller deals will allow you to establish a track record which ill attract the bigger money down the road. 

We used some HELOC funds to replace windows and the roof on our primary residence and now owe 30K.I would like to use the house to help establish the LLC and am looking at two approaches: 1) start the LLC, apply for a BLOC, use BLOC funds to purchase the house for the LLC, or 2) refinance the house and use the funds to pay off the HELOC, establish the LLC, and provide an initial operational reserve.

Not sure what point you are establishing.  

However, buying in this way without having an association established creates a few lending issues...They can be overcome, but have more hassle and $ attached to them.

Those on fixed income may not be amenable to any future rent increases, so it can become a problem if they want to stay long term in an area with increasing rents, but may be welcome in established area where you just want longer-term stability. 

It's easier to establish dominance on the first page on a rarer keyword.

My current realtor just got his license and although he works for a very well known and established firm here in AZ (part time), and he was a rental property investor back east for some time, he is new out here and he doesn't really strike me a "go-getter". 

And you want to be like your hero MSOOTKAUG, and build an empire, then establish your self among the filthy and powerful while secretly building an army of robotic minions to take over this rotten planet?

I would hone in on your target market(s) and begin establishing relationships.  

My understanding is that one would simply cash-out refinance right before the balloon payment is due and pay off the owner finance balance and then begin making payments toward the refinance note, or establish a HELOC.