Why would the basic structure of a subject to transaction be different in Illinois than it would in any other state?

It is a 2 unit RS-3 that I converted to a 3 unit RM 4.5 because it has a coach house that wasn’t legal which I didn’t know until I basically got to the closing table. 

I respect that you are doing it with kids, too many people use that as an excuse.

Basically the late-in-the-game career-changer who's taking what feels like a big, scary risk?

I am no banker and there are people here that will certainly address your question better than I... but it appears you are blending real property and personal property and trying to bundle together into an LLC. 

Yet a bank needs more than basic concept.

People are willing to pay the high interest rate because they expect to pay off the loan quickly.If you own the home outright, you would go to a traditional bank to cash out the equity.

Some people are not comfortable with older product.  

If rates did drop, that 3 year fixed period means their rate would automatically drop with it, so they wouldn't have to refinance if they didn't want to, but if they did want to (cash out refi made possible by a recession forcing more elderly people into assisted living facilities, thus driving up rents, and the value of assisted living facilities? 

Contrary to popular borrower belief, the mortgage business is actually more about people than numbers.