Background: 

My wife and I made lots of changes in our lives over the last year (REI and non-REI related), including her going into REI full-time. Our short-term goal for 2016 was to get a business entity going, get mailbox, phones, business cards, accounting setup, processes, etc..etc and purchase first buy and hold for the LLC. We got the buy and hold, its now rehabbed and rented, but didn't purchase it into the LLC, because we found out at closing about this "Due on Sale" clause. The reason we want the LLC is to keep finances as separate as possible and reduce our personal liability the best we can. We fully understand that we could (likely should) purchase umbrella insurance policies to help with liability, regardless of the entity. We will be including that expense in future pro forma's prior to purchase. However, we now have a few additional concerns/questions as we move forward this year.

Questions:

1. We want to build up credit in our LLC so we can eventually have the banks lend mortgages directly to the LLC. We aren't yet comfortable taking the risk of voiding title insurance (by use of quitclaim) or risk banks calling our loans (via Due on Sale clause). We realize many here are comfortable with that risk. We're just not sure yet if we are. Given that, does anyone have suggestions to help build credit without forcefully moving properties into the LLC? NOTE: we are still exploring if we will be/should utilize the LLC for upcoming flips.  I’m not sure yet sure Hard Money lenders will even allow that.  We also haven’t yet had a need to register an EIN, but I assume that will likely be one of the first steps here.
2. RE: LLC taxes vs. Personal income tax - the only members of our LLC are my wife and I. As a result, since we have no employees, don't do anything with dividends or take out percentages of profit, I believe the Net Income from the LLC (after expenses and typical mileage/depreciation type deductions) is simply added to our personal 1040 Schedule C and gets taxed at whatever rate the additional income + W2 income (from me) gets taxed at. Is that correct? Or does the LLC-related income get taxed at the lower rate it has (10% for up to 18k, 15% up to 75k, etc..) and then we add that amount to the "to be taxed" amount of the higher rate I am being taxed at with my W2 income?
3. Let’s say we earn $25k in net income from flips in 2017. Towards the end of 2017, we take that capital from the flips and purchase a buy and hold property, using the capital from flips as a 25% down payment on a 100k loan. Considering we’ve moved our profit into a long term loan (liability), do we still consider the 25k a profit? Is there any way to leverage 1031 exchange with this type of transaction to avoid losing additional money to taxes?