And the reality is the lot is NOT split, and the real cost in doing so, the impact on cashflow and the risk to my loan make it an untenable effort unless I planned to sell right away. 

This dynamic needs to change and hopefully difficult times like we are currently in will force limited partners to demands more transparency. 

Which give you opportunity to force some equity.

I believe it will continue to be unattainable for most people entering the work force.

One of the primary issues is the impact of rent control policies.

In my experience, you can purchase the existing home and the encroachment is grandfathered in, meaning the vacant lot owner can't force you to move it.

Its not worth the headache to force someone to stay who is just gonna not pay you anyways.

Does that impact any advice you'd give?

The LLC will have zero impact on lending.

There are several things here -1. 3-4 unit properties require a self-sufficiency test, which could impact your down payment requirements as that could change the max loan amount that they can lend on.