Paying a professional to help guide you through this process is VITAL on your first several development deals.

The math is easy, the 1st Lien Heloc, even at a higher interest rate, will out perform a traditional mortgage hands down with respect to gaining equity/wealth much faster, with no change in household spending habits. 

We want to ensure the property is safe and habitable, but these expenses seem excessive.

So I guess that was my lesson number one: all the issues you’ll have with residential agents are magnified in commercial agents and finding a good agent to work with is more vital in commercial.  

On a positive note, I am going to share some vital advice my father taught me that might help you in the future:1.

As a newbie your and other comments here have taught me that follow up is vitally important.

Knowing what a specific repair will cost is one thing but knowing how to catch those issues before they become an issue is vital. 

I have thought of not doing the repair work but she has implied complaining that to City and said the house is not habitable.

LOL  If there's going to be problems down the road, their advice or forethought as to the planning/building of the structure, at least the flooring/layering on top of the existing structure, is going to be sooooo vital. 

If the property contains a residential structure, you can do any necessary repairs to make the property habitable (but not upgrades) and the VALUE (not the cost) of those repairs is an additional charge if there is a redemption.