It is ultimately your choice but there are other ways to limit your liability if that is your reasoning for requesting the loan be in the name of the LLC.

The rule in lending is you will always get a lower rate and a higher LTV loan to value on your primary home.So if you tie up money in a smaller investment and then need cash your limited by two factors the loan size and the Non-owner occupancy if it s a rental you get a lower LTV.

First, you can get into something for 0% down as everyone knows, but it can help out tremendously later on, in that once the property appreciates (which, it's San Diego so its a pretty safe bet), you'll be able to do a cash-out refi, nabbing low VA interest rates and up to 100% cash-out (though most lenders will limit this to 90%) with no PMI to help with the next purchase.  

That's when we found out that flood claims exceeded the limit without permits being pulled. 

My primary concerns are: it’s a rather small town and I think somewhat limited applicant pool to fill the units. the current owner pays water and electricity - I’ve asked for recent costs which the realtor is in the process of getting but it did not sound like a substantial amount.

I started 4.5 years ago with very limited capital in a way lower-priced market (that still has growth).

But one must start somewhere, one must finally take real life action, and one must continue to fight the good fight (stay focused, don't give up, always strive to learn new things, always network, and keep pushing the limits of your goals). 

This can be a difficult and slow process with limited capital so start it sooner, rather than later. 

I realize that I may be limiting myself to less desirable properties by not accepting a higher monthly mortgage.

Is your investor looking to be a limited partner in a fund/syndication?