Much of the cost of renovating the unit will be borne by me, and a fair amount will be now covered by insurance; the carpets have burn marks, the walls have got large brown areas, doors have been kicked in, there will be lost rent due to re-hab.

Because they dont front the renovation costs, hard money lenders require you to pay for the reno costs upfront, then reimburse you after an inspection.

They don't have any seasoning terms from our prior conversations, but we hit a few hiccups with our renovation through most of the fall so we're nowhere near close to a refi yet. 

Larger apartments are valued by the formula NOI / Cap rate. 

Recently purchased a property with (2) garage apartments. 1 currently has a resident and the remaining apartment is being slightly renovated to make it suitable for rentals.Being that I personally mortgaged the property, should/how can I set up the rental portion under an LLC? 

I then put that money toward a larger house for my growing family, but I've always been interested in real estate as an investment. 

Break down the wall and make your unit larger? 

Some properties are turnkey where factors can determine whether your knowledge base will suffice or you need a more in-depth view others are heavy deep renovations where it would be a best investment protection to know what you don’t know; possible septic issues, roof, mechanical electric... then it’s best to get a pro if your a pro or have one. 

somewhere is that there are lenders of some sort (not the usual big banks) that are willing to lend a little more creatively as in larger down payments or higher interest rates. 

Go to larger multi-families or commercial properties, perhaps investing passively in syndications to get your feet wet, then decide later if you want to start doing your own deals.