The first thing you need to modify in your search is where and how you can acquire properties significantly below market value.

Can the original offer be modified lower to compensate for the repair work?  

The lessee family are living in the house and were paying rent (some modified lease agreement).

The 10 year maturity date is where the LOC will modify into a different product all together.

Second, contrary to suggestions above to clarify or modify the lease, in SF it is against the local San Francisco Rental Ordinance to unilaterally make changes to an existing lease agreement. 

I'm currently doing a modified BRRR with VA loans.

"Our state organization, OREIA, has been fighting hard on your behalf to modify a state bill dealing with the remediation of meth labs.Senate Bill 113 would make landlords responsible for the clean-up costs of meth labs found in their rentals, even when the landlord had no knowledge of or responsibility for the crime.

The current owners (now the estate, but formerly the people who owned it) were the original owners and did not modify the home (which the city does not believe, apparently).

If this is the case modify your offer as warranted, if you can pay cash.

Using a HELOC is fine for short term financing needs, not long term as these loans can be called or modified at the whim of the lender basically, read the fine print!