Obviously no one can predict rates in 5 years so assume that will be what it is, but is it still typically another 5 years until the next balloon payment or refinance and a 20 year amortization? 

No one can predict the future.

Timing when to sell is hard to predict but now would be a win for you either way.

Conventional wisdom states that holding stocks long enough (e.g. 20+ years) should give you a nice, somewhat predictable average rate of return, based on long term observations of market appreciation. 

It is impossible to predict.

I would like to help her out but rental market value is only $1300 and there is no equity but there is a potential/predicted increase in value of 8%.

I think you will find your next investment property pursuit will have a much more favorable interest rate and you will be more aware of the financing in general and be able to predict your bottom line after closing the finance with a bit more accuracy! 

Also, we predict that this house will continue to appreciate in value over the years.  

You can form an LLC as you are in the process of buying the property, just make the realtor know and the lawyers office or title co. know that it will be under an llc when you close, and provide them the information before the closing. some banks will lend to llc's, if its a buy and hold, show them all the financials and predictions that the property will make money and you will be able to pay them ( go in with something from your CPA or financial adviser showing your net worth too) right now i have 3 properties under their own llc, waiting for realtor to send paper work to sign for 4th as i type this. some people here will put each under their own, some will have an LLC that has as many as 5 houses before they form another llc. so you will get mixed answers on this. the house i am buying now will be a flip, so i will form a llc-s corporation for this one and future flips. but have been thinking of creating a parent LLC for my holds.

Accreditation is achieved by either proving the investor has a net worth of $1,000,000 not including primary residence; by proving that the investor has made $200,000 a year over the past 2 years, with a reasonable prediction to make that again this year; or by a letter of accreditation by a CPA, attorney, or other professional.