Basic details: If selling, we were going to take about $90k equity and take that to our new home. 

Seems to me that any basic lease should cover renewals, notices, etc...

This is a basic layout of what's happening in my head, but I'm wondering if I'm oversimplifying things:At Year 0:Value - $150,000Debt - $100,000Equity - $50,000At Year 1:Value - $156,000 (assuming 4% appreciation)Debt - $98,653 (30 yr. @ 5.50%)Equity - $57,347At Year 2:Value - $162,240 (again assuming 4% appreciation)Debt - $97,230Equity - $65,010My question is, is it possible at the end of year 2 to expect to be able to cash-out refi at ~80% of the equity ($52,008) I have in the property and recoup my original investment?

Basically - what would you do in my situation?

They basically just sit on your books until you acquire the property, at which point they'll be added to your basis and depreciated.Forming an LLC won't change that and @Jeremy England is right - all too often, I see people form LLCs and pay the annual fees and what not for a year (or even longer) before actually acquiring a property.

Here's how it breaks down. 6% is just the basics.

The first floor consists of 2 restaurants and the second and third floor is basically a 5 plex of apartments. 

Basic Economics by Dr.

Your basic problem is not your fees it is that you have lax business practices that have trained your tenants it is OK to pay late.

Not sure where your located but its a gamble to rent and wait.. its only 6k negative a year that's not bad.But if having that debt precludes you from other investments then sometimes its best to cut and run..