Priced too high, rents are too low and investors do not want to gamble loosing a tenant right away, the leases are wonky or maybe there are bigger issues (Estate, Something wrong with the property etc).  

Are they bound do go one way or another or because it is a mixed property, do they have flexibility to determine which way it should be appraised? 

Income could drop to nothing quickly and the bank wants to be able to foreclose, resell the asset and walk away without loosing money. 

We've already obtained approval from the water provider and it is within the bounds of the county ordinances.

In a state like New Jersey with the prices being what they are, the "easiest" way to do what you are suggesting is going after distressed properties in seriously dilapidated condition so that your ARV is leaps and bounds above where you purchased, enabling you to extract enough cash on the cash-out refi to pay back your investors and hopefully yourself.

@Ryan Brown..I have lenders who lend on off-kilter properties and locations in OR, but being off-grid might really be out of bounds even for the most aggressive lenders. 

To me it looks like the Three Stooges did it.One trade opens a hole in the wall/foundation to make some repairs, they don't do hole repairs and leave it.Homeowner decides to just leave it, or stack loose rubble bricks back in the hole--thus saving cost of a proper repair job.This is an extreme brick problem: https://www.clickondetroit.com/news/defenders/2020/06/29/detroit-familys-home-collapses-as-landlord-refuses-to-answer-calls/

I don't want to loose the opportunity of getting the money but I want the money to make me money.

The worst is you loose couple hundred dollars for inspector, but gain lots of experience through talking to Realtor, inspector and contractors.

I don't see how you can keep this home without loosing a bunch of money on the investment.