This policy will provide additional coverage above what your existing policy covers.

The fact that you're already working with an existing property and clear goals for redevelopment shows lenders that you’re serious.

Grandfather rules rarely apply or work for STRs in most locations and apply to existing STRs there.

This would cover the $675K needed to pay off the existing HELOC and mortgage, leaving you with about $200K after payoffs and closing costs.However, it's important to consider the cash flow impact.

Another option is assuming the existing mortgage, which would involve contacting the current lenders to explore formalizing the arrangement and having the properties deeded in your name while taking over the loans.

@Dave Kush You can send them a certified letter that it is no longer a smoking building and you would have to use an existing term like quiet enjoyment or not disturbing others to enforce. 

If you find something, go hard money and then spend the next few months re-leveraging the existing debt.You can have your cake and eat it too, just be patient my friend. 

This policy will provide additional coverage above what your existing policy covers.

We have found its actually cheaper to build right now than buy an existing property. 

I'd think there exists an option for a loan of SOME sort that only cares about the value of the asset, and that the loan stays current.