Would like to put into LLC for improved tax benefit and protection.

Size can be a benefit, it can also be a detriment.

Also, if I earn $40,000k/yr as a rental income, will I get any tax benefits on those income for having a 2nd home?

Once you are up and running if you decide to scale then maybe looking into your own direct to seller marketing could benefit but it also adds more complexity and time involved.

For non-residential applications (like north side green houses) the thermal benefits could be significant and I'd be exempt from permits. 

Which is one of the great benefits for LPs. 

Do your best to find some lenders that are VA saavy to make sure you are uncovering all the potential benefits that are open to you.

Our market is heavy on the appreciation side at the moment but STR's have become an option to increase cash flow and still get the benefits of investing in an appreciating market. 

That's probably the most efficient and immediate ways to reap benefits of RE investing.

I'm willing to be the bad guy here, but I want to make sure I have this clearly organized before I execute the plan.I have thought of asking them to transfer title to me, but then would the tax implications negate the benefits?