As for the sec deposit, follow MO rules, which allow for you to deduct unpaid rent from the deposit.

Constitution provides that "[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized."

Once the asset is paid off, the cash flow will actually support hiring a qualified professional who will make sure your LLC is managed the way it is supposed to be. 

I can probably get about $1400/mo in rent, so it fits the 1% and 50% rules.  1) If I were to do a cash-out refinance, my understanding is that I would affirm that I plan to stay in it for 12 months. 

I'm thinking the area population can't support this deal in the time frame I'm looking at.

Portfolio lenders typically follow the same (75%-80%) rule and consider the additional income from your properties and perhaps relax on the debt to income ratio and as long as the deal makes sense and generates positive cash flow.  

If not is there a rule of thumb people take after on the first after (5% or 10% below list price for example)?

Any advice on how to creatively and legally get around this 2 year rule would be greatly appreciated.       

There is no right answer here but know there are other options too.In theory, all a conventional mortgage (meaning Fannie/Freddie loan) needs is just your income to support your debts. 

The IRS rules allow me to manage it, but I have always used a property manager and will continue to do so.