We paid 3.5% down using an FHA loan at this time and still have 277,000 of principle left (so we are still paying the PMI). 

The above example just shows the value of principle pay down by your tenant.  

If you have an objection with the assessment, you can appeal with the auditor's office. 

I have to buy the property on my own name for option 1 whereas I can buy the property on LLC name for option 2.Does paying more each month in Principle and Interest justify buying the property on LLC name?

Same principle applies to rent

The situation is likely the same all over the country.The person objecting to my original post raised the point that one of the examples of organizations fined was for a very large apartment complex accepting government money.

But the principle will still apply.  

If you have 3.5% down, with very little money going towards principle the first two years, you most likely won't be able to refinance unless you greatly increase the value.

What may seem like a deal to one person may not be for another depending on position in life, experience, access to capital, etc... so just take the time to do your own research and run your own numbers and we are more than happy to assist so that you land in a project that's suitable for you because that is our main objective.

Then they can lay out the full scenario for you and tell you how best to approach it to ensure your DTI is under control and you can complete all three objectives.