If it sells after that, she only gets the $250K single exclusion.Is this correct??

But I have heard that rarely happens as long as you have a good payment history.From a tax perspective (again, not the expert here and could be wrong)....I believe that you will need to file a separate return for your LLC, even if you are a single-member LLC. 

Every single situation will be different for each person.

Even with the single bathroom, I'm confident I could get corporate & business clients because of the location.

We invest in single family homes with 3+ bed and 2+ bath on the west side of SF and we are always looking. 

The last deal was a single family unit.

So my new proposal to her is to start out with a cheaper single family home ($26000) to get our feet wet and learn more about how it works before getting into higher priced multifamily properties.

Single families / multi’s section 8 ?

You still get high cash flow but you don't have to go through an all out war every single day.

I think you can even manage to get a little cash flow as well.I would suggest getting 2 single family homes for around 250k each.