It sounds like you've absorbed a bunch of problems already and a new sewer line and the current basement situation will cost you way less than the $50K in fees to sell it. 

First time poster here.....my husband and I are about to sell our first flip. 

Happy to be part of a great community. Looking to buy multifamilies in Houston

BP has built a great selection, all of them worth reading and that will help you build foundational knowledge.To answer this one: the words from old school investor Dolf De Roos "seldom sell" and you will find a lot of post on BP from people who regret selling properties in the past.

Selling an investment property, especially one with a low interest rate, shouldn’t be taken lightly.

A 1031 exchange will allow you to sell your building and use the proceeds to invest in a small multi family and/or medium term rentals.

We have an opportunity coming up from a family member who is willing to sell us my childhood home for what they got it for (240k) and the comps in that neighborhood are 600k+.

From a tax standpoint, there are additional disclosures to make when selling a business asset for less than fair market value to a related third party. 

I have 2 options:- finance the construction pre-selling the apt, and take my profits (expected to be around 700K pre-tax); or- finance the construction with a 6-7%/year loan (collateral = my house), keep the 10 units, and once the building is completed in 24 months, rent them for circa 180K/ year gross.

Insurance is dropped, which is a very real trend these days, and we have an uninsured home that cannot sell.