I would like to update the propriety but lack sufficient funds and do not want to tap into my savings.

This was the process for me:   Secure sufficient business lines of credit through Fund & Grow. 

This is personal preference, but I guess just join any HIIT class is sufficient rather than working hard alone.

I agree a spreadsheet would be sufficient for me with only two units. 

Also to make it legal, you need to make sure you have sufficient egress, fire separation between upstairs and downstairs and technically you need entirely separate mechanical/plumbing/electrical systems.

Maybe, this would be considered a distribution of property from the LLC which would cause a taxable gain should the llc not have sufficient basis to take from.For #3 and for all of your questions really, there can be a lot of hidden complexities depending on your exact situation.

The loan amount is sufficient for me, as I am not looking to borrow more than necessary anyway at current rates (7.35% seems to be cutting edge right now). 

So we look for sufficient capital reserves to be sure people stay out of lawsuits. 

You mentioned using an FHA loan, but that poses some real challenges in the city for a three-unit building because it's very difficult to find properties that can pass the FHA self-sufficiency test.

In your example if value is not sufficient, they will hold you each accountable and if your four partners disappear, the bank can still hold you personally responsible for the entire deficit.