I don't have a ton of cash, but I do have about $150k in equity in the first house so that may be a potential source of funds to finance some deals.

Meaning if you only have access to $20,000 in equity, I wouldn't spend the $1500-2000 on a re-fi to access it, instead I would do the line of credit at considerably cheaper.

Everyone gets their $1000 back but also $2000 more in equity for the next project.

I work in syndicated real estate and have placed many clients into Delaware Statutory Trusts in that market in 2015, but I also removed one property from our approved list of DSTs at the time and pulled $2M in equity into other investments after I visited it (which virtually no one in my industry does).

Here are a few thoughts to consider:If your ARV is correct and your repair estimate is accurate, it's worth asking why the owners are prepared to forsake $40K in equity just to avoid a $6K expense.

What sense does it make to only put 2 or 5 properties in each LLC if some have tens of thousands of dollars in equity and others have hundreds of thousands.

In our example after 10 years you will only owe $1.4MM on the building IF the property never appreciated one cent and it was still worth 2.5MM in 10 years you would have $1.1MM in equity.

Meaning that a conventional loan (loans governed by Fannie Mae and Freddie Mac) will allow you to buy an investment property at 15% down but you have to have 25% in equity to refinance.  

(BTW, my first mortgage is a 1 bedrooom condo in Queens that was under water when I first started my mod. but has since balloned to bing +50,000 in equity with rising home prices).

To me, even the pay down in equity wouldn't be worth it.