If you feel very confident on your ability to return your projected numbers and keep rehab budget/timeline and ARV in check, then I think hard money is the way to go based on just the numbers. 

This place has a solid reputation, steady revenue and the only issue with the business seems to be the families health and ability of the current owner to operate it in her elderly years.

I will say that based upon where this property is (very desirable location), I'm not terribly concerned about the demand, and the ability to find very good tenants. 

If its a small business loan under an existing/new LLC then the banks typically look at the income generating ability for the property in question more than your personal income.

Before you can be creative and think outside the box you must know what's inside the box, what the rules are, how transactions can be engineered, how to use other assets, monetary assets or your abilities.

I just want to hack or speed up our ability to invest in RE.

I want the ability to do lease options here in California and I know you are in SoCal.  

Additionally because of the strings attached I don't have the ability cash out any of my equity (but I do have quite a bit.) when I bought this house I knew nothing about real estate.

A lender policy insures, basically, ability to foreclose and retain that priority.  

In many cases, the child will have the ability to own and control legal title title upon reaching majority at age 18.