I would rather have people toss garbage in a trash can than leave it laying around or kicking it under the bed.

It won't be as much death benefit as you have now, but it's better than losing the money completely.  

Each unit is 2 bed 1.5 bath.

I started out with value add, where we force appreciated properties by adding square footage and beds/baths.

.• Primary residence: A 2-bed, 2.5-bath townhouse purchased in 2020 with a 2.75% interest rate.

The 1st position heloc has nothing to worry about because it will still be attached to the property after the 2nd position heloc forecloses....death of the borrower has no effect on it.Likely not time to make a deal with the “owners” since that would likely involve probate, and time.  

The issue I have seen with these types of properties is they could have two valuations - the value of the real estate which the structures will have little value and you have the land the other is as an operating business just like a bed and breakfast would have - real estate has value but it operates a business now you mention 12k / month but if someone also has to manage the property what is that worth and what would someone pay to manage a property like this?

Quote from @Jason Seay: 3 bed 2 bath house. 

Home was nice 4 Bed 3Bth under $550K with a decent size lot/yard and it only required 5% down as a New primary.Now I am not sure how big of a home you need but as you can see $100K covers much more in a scenario like that one above. 

For instance, things like death, divorce, job loss, natural disasters, heath issues, etc may cause you to change your plans unexpectedly and may change what you do with your home as a result.