However, if you have the means, commercial can be very rewarding once you put a property on "cruise control".Just one person's opinion, but I hope it helps!

Then there's the concern of how long will it take for the lender to dispatch the inspector and reimburse me.Are there any HM lenders who actually release the funds upfront so the buyer is in control of paying in a timely fashion?

Sounds like an expensive area... it's LA :)  Rent control? 

You have $30,000 in appreciation, much of which will be sucked off by commissions, transaction taxes, title insurance, lost rental income (buyers usually don't like inherited tenants), and the fact that any buyer is going to say "I have to replace the roof and AC in five years or less, so I'll discount my offer."

. $600 a month is $7,200 a year in lost income.

You should focus on the fees the lender controls (origination charges and the fees you cannot shop for).

Hopefully you realize that is a rent controlled property (state rent control law). 

My husband is self employed as a pest control salesman, so we get paid as a 1099 contractor instead of receiving a W-2.

Giving them the second cash offer takes this power away from them, makes them more confident in your abilities, and makes them feel still in control by having two options to choose from. 

If you don't have your expenses under control, nothing else is going to matter.