@Jonathan NewcombCan you explain what you mean with the falling off homestead?

It's highly doubtful that a cash buyer is going to object to a process that doesn't affect them.  

When I last did an increase (of a mere $30), I explained that taxes and insurance went up (my mortgage payment really did increase by about $30 too).And as long as you are providing her with a great customer service and housing, then you should be fine and she should still me happy.

I hired a public adjuster and he took over everything (and explained WTF was going on in the simplest of terms so my brain could understand) and he got us 150% more than the original offer.  

I'd call them and explain the situation

If you need more clarification you should contact your lender and ask them to walk you through it and explain the difference, but really all there is to it is the list you referenced are all closing costs except the 20%, which is the down payment and is separate/in addition to any closing costs.

However, we would go from passive income as landlords to having to pay self-employment taxes, plus commercial insurance (which is double the cost), plus all of the costs of setting up these LLCs, plus added taxes, etc.I manage the property and do basic repairs, but everything else is contracted.So, for all you real estate gurus...Can anyone explain why to do an LLC? 

If after explaining objectively the situation your clients decide they want to go to court, then go to court.

I don't just put that in the lease, I explained it to them and explain to them why.

I really blame the contractor since he should really explain that eventually everything breaks down.