There's no problems living next to your tenants, just tell them your the manager NOT the owner to avoid guilt tripping.You have to analyze the deal 1) while you're living there 2) when you move out.

I understand I wouldn't get the benefit of tax deductions, but what else am I missing that makes this a good deal? 

I'm looking for referrals for a custodian, tax attorney, and a CPA to set one up and advise me.

Do you know if that could work the same with something purchased at a tax auction?

@Brice Alef-Torrisi putting each property in its own LLC is usually overkill.Getting a bank account for each LLC is typically something you need to do to avoid "piercing of the LLC corporate veil" (actually depends on tax selection you made for LLC), but is also overkill.You haven't indicated how you are holding the deed for the latest property.If in your name or same LLC, you don't need a separate bank account.If in separate LLC, you can create a Master LLC, have each property LLC hire the Master LLC to manage their affairs, and just get a bank account for Master LLC.This is an opinion, not advice, so lookup CPA Frank Alcini in Troy for expert advice.

https://www.biggerpockets.com/forums/51-tax-legal-issues-con...

For example, instead of tax returns and W2s they will check bank statements and the After Repair Value (ARV) to underwrite the loan.

If I were in your shoes based on what you told us, I'd probably avoid hard money loans right now.

And of course we're in agreement on consulting a tax pro.

If you do place the property in her name, you've got a Gift Tax (Form 709) to complete.