Did you ever make any progress , i am also looking to take one of my existing properties and converting.

With a special warranty deed the seller is guaranteeing the title for issues that may have come into existence during their time of ownership only.

If so, how do I pair my existing 401K to a trust?   

But you have a plethora of existing landlords that are doing just fine from their previous purchases (myself included) that might somewhat stand in the way of that equalization.  

My wife and I are looking to invest in existing or project-stage vacation rentals in Mexico / the Caribbean.

I don't think it exist yet.If that is the case, can we do our homework by providing the comps with similar attributes (ADU, JADUs, etc) when requesting the appraisal?

I’ve determined after much research that my existing markets make more sense for me than going out of state.

If there is no exist strategy, it would make more sense to do a HELOAN or a refinance.

During rehab process the bank sees us with; 2 mortgages, 0 rents, and 1 income (spouse not working) and would be too risky. 2 mortgages will make us at borderline break even cash flow with existing income.

Quote from @Hunter Jordan: You can only apply the security deposit to existing charges.