Housing tenure choice — own versus rent — comes into play as well.

Owner is willing to assist with financing property is free and clear.

A friend of mine, aka my current real estate agent, is in need of assistance.

I believe real estate investing is all about finding ways to create value.

You don't necessarily have to create different LLCs for each properties, but if you have a large portfolio, usually they should be in multiple LLCs.

If my goal is to continue investing in real estate and consider refinancing when mortgage rates become lower, would Option 3 be the most suitable choice for my circumstances?

If you can find someone with hustle and construction knowledge they may be able to help you take down a distressed property allowing you to create cashflow and increase equity significantly. 

As always, look at your states statutes or hire a real estate attorney in your area to assist.

*This post does not create a CPA-client relationship.

The idea of finishing the basement to create a personal space for you and your dogs sounds like a great use of the area.Given your background as an active-duty military member and a licensed real estate agent with a decade of experience, you're well-equipped to navigate the complexities of real estate investment.