Just to clear, if you are deeding a collateralized property from your personal name into an LLC after you have taken out a residential 30y fixed rate loan you are in violation of your mortgage contract.

Perhaps I misunderstood your response to @Joe S. but having  to bring new collateral to the table in order to sell/release properties is not ideal.

The fact of the matter is that most tenants are below the 620 line and if you are able to properly collateralize yourself you should be comfortable taking that risk. 

If I need cash for another deal, I borrow using the note I now hold as collateral, or use the note in a more creative way.  

The lender's policy will protect your interests as the lender in the collateral.

You could also explore cross-collateralization using existing equity..

The note is tied to house A.Numbers:House A: $400kHouse B: $525kDebt: $450KLet me know what you think.If the lender won’t accept a partial payoff to release collateral (one house) then you’ll have to payoff the entire balance at the time of sale.  

We can lend on this property given the AS IS Value, or use other properties as collateral, we just require to be first position and has to be held in an LLC.

It could be anyone... a 1st position lender, a 2nd position lender, an HOA suing for their HOA fees, a 3rd party where a borrower pledged their house as collateral on a contract, etc, etc.The biggest thing to know is that senior positions survive less senior positions.  

Your numbers seem solid, and a DSCR loan is a good fit for this kind of deal since it focuses on the property's income, not your personal DTI.For the down payment, using a private lender, partner, or equity investor is usually more sustainable than a hard money or business loan lenders often frown on borrowed down payments unless properly disclosed and backed by collateral.