Howerver, I have resrvations about how this will impact the community's living standards as the development will immediately border some neighborhoods and could bring unwanted environmental impacts and noise. 

If you have a 12-month history of the property's performance, you may be able to get some wiggle room with more local banks for it.One thing that may impact the lender's ability to lend could be the Debt Service Coverage Ratio (DSCR), but as long as the property cash flows well then that shouldn't be an issue. 

Not sure if this will impact my Value. 

Before you jump through the hoops and incur the transactional fees of transferring this duplex titled to yourself and wife to an LLC can you articulate the liability exposure risks you believe could impact your personal assets?

You could consider it disposable but I am guess the costs to get it safe for habitation will really impact your decision.Regarding the house on stilts, if it is properly engineered it would be considered real property with a unique foundation.

Cons - directing tri plex cash flow away from other investments for 4 years but also not impacting my W2 lifestyle. 

The shorter the prepayment term has an impact on increasing the rate.4.

Regarding risk my perspective is that it is much lower than typical common equity deals in that there is a 25% cushion re valuation drop before the pref equity holders would be impacted.

Partial disposition might make a bigger impact.

(From what I hear the first property can be very impactful to jump starting one’s real estate journey (or very very negatively impact it,).