As an outside party (in 2013) I was given access to the financial records, but as an owner, I no longer have access to these records.

I was really just hoping for some solid eye opening agreements to why he wants it all legal and written down.

Totally legal to rebate to a principal to the transaction. 

Keep in mind there is still a max loan amount tied to the number of legal unitsA legal 2 flat in those areas can easily be above $1 million, but with a loan limit of $700k you need to make up the difference.  

And in some cases the expenses for legal fees can be double or treble the original judgement amount by the time the debt is recovered."

Be advised that establishing an institutional account for your LLC can take considerably longer than an individual account - Coinbase is running about 4-6 weeks for onboarding institutional accounts currently, as an example.The LLC may choose exchange provided storage, 3rd party cloud/desktop wallets, or hardware wallets. 

He/she would need conflicts waivers from all parties.

I would highly recommend you hire a third party home inspector to get a report and understand exactly what you're buying.

Therefore, a partnership makes sense so that the entire 8-units and commercial space is run by one entity which splits the income and expenses appropriately.Since my wife doesn't want to engage in a direct business relationship with my brother, she would prefer for us to purchase the properties seperately; how would you suggest to organize this purchase so that both parties are satisfied?

I'm not sure of the legalities of doing this, waiting to hear back from my attorney but wondering if anyone here has any thoughts.