I'm going to give my answer assuming the underwriting is correct and you've got quotes for your insurance and a few bids (and picked the highest number) for your renovations. 

I'm considering upping my aggressiveness on remediating this issue with something that will cover up the color of the mold so it will indicate better remediation efforts to future potential buyers. 

Each option depends on your timeline, but a HELOC or cash-out refinance will likely offer the best long-term value, and it looks like you already qualify as REPS, which can save you 1000s in taxes if you plan your investment correctly.

@Dat Chung so to state the obvious, your somewhere around 0, correct?

In San Francisco, this choice is taken out of your hands and is instead a determination made from and by the Planning department.From an Investment POV, you are absolutely correct that combining the lower and the ground floor units is the best option to preserve your ability to perform a fast track condo conversion and generate the most equity in the shortest amount of time.

You are correct that you still have the original 50k as depreciation recapture. 

Hi everyone, I need help in transferring a property from my Fix n Flip, LLC to my rental LLC. I bought the property and rehab to sell. But I finally rent it out. So what is the simple way to put it into my Rental LLC?

Is my logic/approach here correct?

It may take several months of maneuvering to get them positioned correctly , but it will be worth the effort if you get them straightened out.  

Isn't it possible we're both correct based upon our experiences in different areas?