We own the home free and clear. 

To get some insight into the development process, take a look at this thread I am writing, walking through an actual multi-family development project in SoCal: Life Cycle of a CA MF Development ProjectI am an offer of help, feel free to post questions here or you can send DM. 

Feel free to reach out.

I hope this helps and please feel free to send me a DM if you have any questions.

I assume that I don't actually have to pay the capital gains until the principal repayment exceeds my cost basis, which on an amortized loan would be quite awhile (assuming they don't refinance and pay me off altogether).

What are the added benefits of the trust and is it worth the cost?

It almost always costs more (and takes longer) than you think. 

Colorado landlords will no longer have free rein to refuse to renew their tenants’ leases under a measure passed last month by the state legislature and signed by the governor.

In addition, I live with my parents so even househacking will still cost me over $400 a month, which is what I pay to stay with my parents.

That is, unless investors are now willing to pay more than the 1% rule used to dictate.I know it will cost some time and money to get them vacant and fixed up, but the alternative seems to be to leave 10s of thousands of dollars on the table.