A strong valuation and even pre listing appraisal and/or inspection can sometimes be a worthwhile investment but not a necessity. 3-5% commission for what is effectively commercial property is common. 

The idea is that if the AMC is familiar with you, they might favor a higher appraisal, which could benefit you.

2) In a cash-refinance, let's say the new appraised value of the apartments is $1.8M, does this mean you can apply the $300k into the HELOC and not pay taxes?

They will also need to verify the ARV through a BPO or Independent Appraisal Report. 

I used them and I paid for a ARV appraisal to determine the amount borrowed. 

That means you’re getting a loan that will require an appraisal.

Fast forward to yesterday(appraisals are done, waiting on underwriting) after a text from the realtor about signing a document that says I'm okay with him representing me and the seller, I called him and brought up the fact that I'd looked over the purchase agreement and the rental agreement and nothing was stated about the rent increase, but it was clearly stated that ALL rental income even prepaid rents (the warehouse was paid in full up front) would be prorated to the buyer (roughly 2200/month)I'm at a crossroads on what to do, part of me wants to just ask for earnest money and appraisal fees back and walk away, but the cashflow of $2300 (current rents not counting warehouse) on a $105,000 property just seems to appealing to walk away from, what do the more experienced investors than myself think

It's in good shape, but I'm wondering if we'd see the ROI in the refinance from a higher appraisal if we decided to rip it out and add sheetrock and recessed lighting.

They simply did a desk appraisal, whereas a couple other lenders either wouldn't do that or made me pay for a horrendously bad appraiser.

Once the property is rehabbed you can look into a DSCR loan to cash out on the new appraised value.