I am planning to begin real estate investing by forming a partnership with a family member - my brother in law.Neither of us has established an LLC for these purposes yet.I am trying to decide which would be better:1) for us each to form our own LLC individually, where one is the owner and the other an investor, or 2) we form a single LLC as partners.I would love to hear thoughts on potential pros and cons of each, or possibly other alternatives.

An important part of your task will be to try to figure out which bank department and individual you need to talk to.If the owner has vacated the property, I think your chances of finding him and convincing him to cooperate will be slim. 

I have been working in this area for my W2 for nearly a decade and have seen even individual homeowners fined thousands per day for violations.

The answer to that question and what your goals and objectives are about bringing them up to market rent is the key to answering this question.  

The best strategy for you will really come down to your individual risk comfort level.Whatever path you go with, though, treat the businesses religiously . . . attend to them in every way as separate businesses if they are separate and you'll hopefully uphold the purpose of an LLC with operating as a business in earnest.

Echoing @Curt Davis - I would definitely have each individual person sign a lease for their own room if they do not know each other. 

Rather than selling each individually I am thinking it may be better to sell as a whole portfolio.

You may be able to use a PO box for privacy, and that's what most individuals would do. 

He stated that these are “fall-back” options for individuals with less competitive credit, and that the loan package itself is ultimately more costly than conventional.

This happens on an individual level, institutional level, and everything in between. - LA is a cyclical market (as opposed to being a linear or hybrid market).