Seeking Advice - Multifamily, Municipal Lending, Estate

[Nick Coral]

Hello!
I've been a longtime lurker but this is my first post to the community. I have some questions regarding some goals I am trying to reach within the next 3 years. I'm seeking critiques, ideas, and basically want to check my own sanity as to how I should move forward with one of the larger, more complicated deals I've attempted. As an added bonus, it involves family!

The goals: 

•  To rehabilitate a 12 unit multifamily in central Maine (fully occupied ~$45K net/year)
  • I plan to hold, currently appraises for $400K,  no debt
  • Municipality is interested in lending up to $250k for rehab
  • Decent credit, several banks said "easy" to $200k mortgage
•   To refinance the debt/mortgages (~$100K+) of a dying a family member (Bob)
  • I am not completely aware of all of Bob's debts/legal issues and they will be numerous (cursory title exams reveal debt roughly 1/10 of conservative valuation of assets)
  • Several properties are income bearing, or could be income bearing (max gross of ~$4,400/mo within 6 months)
• Place the remaining assets (after debt payoff) into a trust for the heirs to split.

I several options/ways to go about doing something like this. I have permission to take any means necessary but would like to be smart about this - so here I am.

My current plan: 

Refinance the 12-unit using a combination of the municipality's offerings (i have many questions about this) and private debt for the rehabilitation of the building. Rehabbing should raise the value of the asset itself and I should be able to borrow enough for some capital to work with to finance the debts on the Bob's assets. 

What I really don't know:

- How much of the equity should be used for the rehabilitation? How do I calculate this?
- Are their any words of warning when using government-backed loans/grants (aside from what I'm contractually obligated to do - e.g. keep rents fair market for N months)? 
- Would it be better to simply utilize Bob's assets to refinance instead of using my own? 

- Are there any special caveats that exist when planning for a trust?
- Anything creative I'm missing?

- Where do I start? :)

I realize that some of these questions may seem basic to many of you and I am fine with constructive criticism of any or all of the above mentioned. I have pretty thick skin and am eager to learn. Really, ANY advice is helpful and will be researched. Thank you very much!

Nick