Is it just the capitol gains that must be transfered over to the new property or will the equity from the home need to transfer as well?

Several reasons:  no transfer tax, no possible trigger of 'due on sale' (I understand you are f/c, but for general knowledge), transparent to IRS--less bookkeeping, and with proper insurance, trustee and beneficiary designations, you are basically invisible and untouchable.Put your investment property in a different trust, LLC or corp. 

Just keep in mind the seller closings costs (state transfer tax, realtor commission, co-op's closing fees).

What if, just WHAT IF I can have the seller let me "control the property" possibly get the deed, and have him some how let me rehab the property (under contract of course) , and I can allow him to refi and the seller gets the equity out the house (as if he sold the house in the first place) and I still control the property and let it pay off the new loan (if he choses to transfer of the the LLC of the property of keep it under his name for credit building purposes , who knows *shrugs*) and I just collect the passive income for the rental.

Prior to a 1031, does transfer of title to LLC trigger a tax liability or is it disregarded since it''s a single member LLC?

Just add one more point: the borrower pays all loan documents preparation fee and wire transfer fee.

Section D1-4.1, Information Relating to Transfers of Ownership Applicable to All Mortgage LoansD1-4.1-01, Determining Whether a Transfer of Ownership Is Permitted (11/12/2014)[…]D1-4.1-02, Allowable Exemptions Due to the Type of TransferUnless the previous borrower requests a release of liability, the servicer must process the following exempt transactions without reviewing or approving the terms of the transfer:A transfer of the property … to …a limited liability company (LLC), provided thatthe mortgage loan was purchased or scuritized [sp] by Fannie Mae on or after June 1, 2016, andthe LLC is controlled by the original borrower or the original borrower owns a majority interest in the LLC, and if the transfer results in a permitted change of occupancy type to an investment property, such change does not violate the security instrument (for example, the 12 month occupancy requirement for a principal residence).

I plan to flip this property, the foundation warranty will transfer to me but not to the next owner.

The way I read it, this person is using you as a cheap source of financing for his own deals since you would be financing it and transferring ownership to his company.Without knowing more, I'm not sure where there is any benefit to you in this process. 

If that is the case can I buy a property at 3.5% FHA and then transfer it into my llc?