Plus equity growth would fund the down payment for second property through a HELOC.

Even if you do find a lender that will use the appraisal that incorporates the ADU just know that the value will either help with getting a larger Heloc or it might not do much to help your case.

. :-) Second Mortgages Yes, but I am not aware of any lenders offering HELOCs on investment properties.

.* Our agents met and we learned that the lowest they'd go was $510 because of a HELOC* We offered $520K with $10K seller credit to be used for closing costs.

Use the proceeds to pay off your high-interest HELOC, which will reduce interest costs and improve liquidity.Sell Underperforming Properties: Consider selling properties that don’t cash flow or require significant management.

I would use money from a HELOC that I have open to fund the down payment, but as @Scott Trench stated recently on the podcast, that is a short term solution, and I don't want to hold that $48k debt for more than a few months. 

Look at a HELOC on your own home to fund the repairs, then refinance into a new mortgage (at which time you pay off the HELOC.)

The cash flow borrowing full cost via heloc will be marginal, possibly even negative if using realistic expense estimates (I.e. something near the 50% rule).  

A cash out refinance is maxed out at 80% LTV so 5% of $1.3M is $65K minus closing costs.You would need to show income and have a W2 job to refinance but you might be able to take out a HELOC to pay off your Ex-Husband.

Also, when interests were low in US, Heloc used to be a good option.