Our reasoning is that IL has higher monthly rents but the property taxes can eat up those margins, along with a higher sale price. 

Here in California, the tenants would eat you for lunch with the full backing of the local laws if you were too lenient.I am more like Mr Potter but not in a mean, spiteful way.

Seed   I don't know most of the answers of your question.. however having been raised in Cupertino I have been in a few incubators.. and they look pretty much like you would see on TVthe one that realtyshares started in was in one of the TISCH buildings in Mtn View CA... it was one floor of a 10 story office building it had secure elevator access.when you popped out the central area of the floor was eating area.. of course you have to have a ping pong table.. and some other cool stuff kids like.. then if you can think of all the little incubators along the walls all the way around the floor all 4 sides.. and then some out in a bull pen type arrangements.. it was fun.. kids working on all sortys fo different apps software and things..

At some point in my life (embarrassingly ) remember watching Julia Roberts Eat, Pray, Love.  

CapEx and Maintenance can eat you alive with these type of properties.  

That eats up all their "profit".

I estimate my rehab to be max 60 days but if the least seasoning is is 6 months then the interest on the HML would eat away any forced appreciation and not to mention closing costs, so whats the solution?

Julian and Sharon (eating dinner at Mod Market on 16th and Champa 😊)

I feel confident that the 4th bedroom would rent for 400/mo. the piti is 1400 so the only cost I eat is vacancy and cap ex at the moment.

You certainly don't want to blow the corporate veil as that defeats the purpose of having an LLC in the first place, nor want the IRS to look at it as a series of gifts which unnecessarily eats into your lifetime exclusion and annual exclusion.