You can also make it (via proper formation) that the creditor gets stuck with phantom income but no distributions creating the chance for a pennies-on-the-dollar settlement.

E) What would be the best method/schedule of distributing funds from these LLC’s to us as owners?

This distribution is something I can look up in state code, but wondering if you know off the cuff.My angle was to use an Affidavit of Lack of Probate to avoid probate as decedent did not have a trust, joint tenancy with right of survivorship, community property agreement, ect.Once the affidavit is recorded with the county auditor, the net effect is to vest title to the "rightful" or legal heirs since there is no will.

The same board in which distributes construction permits or is that delegated further up the chain?

@Navid A.Normally you use the operating agreement to determine how to distribute proceeds on flips.

I am not a lawyer ..I think owner gone is never coming back and at best one more skip trace could be tried and then it is time to realize he will not be found and that he no longer has any claim to anything as it seems silly to have $38K rent in a jar, mattress, under floor board, etc.Fair distribution of $38K is another matter but maybe donate it to a good cause in the neighborhood (boys and girls club, a park, other).

Then you have the rest of that set to distribute to other units as pieces get destroyed.I try and do the same thing with all the dishes, silverware, sheets, towels, etc.

Your distribution more than your initial capital just decreases your basis.

Typically though an appraiser will use a income capitalization approach on an income producing asset.Essentially value is derived from the Income - Expenses = Net Operating Income and then a cap rate gets applied to it to determine value (cap rate isn't a sole indicator of value just one of the many parameters that people look at).Feel free to DM me some details and I can assist, but it varies market to market.  

The real difference will be the estimated 7,500 new section 8 voucher's that are on tap to be distributed as they opened the wait lists and are considering added that many families with vouchers.