I was conflicted on DR's adamant position against leveraged debt, however, having a degree in finance and economics I believed I had well balanced approach.

Quote from @Mary Jo Carruthers: Its really simple economics.

hence, your strategy is good for you but doesn't make sense in an economic stress test to a lender.

And economically, they aren't wrong, that would be the highest and best economic outcome from a valuation perspective.

A little further from home you'll find some of the value you are looking for in Kentucky, another state that is supportive of manufacturing and in following the state Economic Development you'll see chomping at the bit for more manufacturing. 

Based on Micro and Macro local market and economics the ARV can be subject to many changes come time to get the appraisal for exit and many investors slip when it comes to margin to make the refi make sense.

I want to explore if I can use this property to raise funds, economically under Reg D 506(b) using custom STO token and pay the Bank.Any ideas!

Cash Payment: Paying cash for improvements is often the most economical way.

I'm particularly excited to learn more about mid term rentals, BRRR method, and any other strategies people find still work in our current economic climate.

Also, since this is your residence the economics are slightly different.