Hello all, I've been an avid watcher of BP for years now and I've decided to get more involved.Anywho as I ponder on the current macro trends of our economy I have been thinking if the looming threat of recession could be the final straw that will break the preverbial camels back to real estate prices.I have heard that the covid shut down really stretched those doing the STR model and wonder if high gas prices + inflation + recession would bring another dry spell in vacancies.

FHA rules are typically pretty cut and dried.

It's not going to matter unless you have some kind of weird vapor barrier preventing moisture movement below the sheathing - water vapor moves through the roof sheathing all the time, and wet wood will dry out the same way (water vapor moving from wood to drier air). 

Go over with a broom, bucket (to put the glass in) and a wet dry vac (to vacuum the floor afterwards).

There are multiple soft spots in the floor, minor ceiling damage throughout, shower/tub kit likely needs replaced, areas of rotted wood on the outside, old floor furnace needs properly sealed, and the carpet needs ripped up and replaced.

Replaced rotted outside wall.

I'd draw down your HELOC and keep it dry for a better investment opportunity. 

Based upon your Scope of Work you included, it seems like the house is completely rotting from head-to-toe and will need a full exterior re-build and interior re-build?

Also, before making any decision, you should question yourself if you have a solid business plan once you get there and if you have found the right people to help you get the seal the deal since you would be on a very tight budget and have a limited time frame before you run dry. 

Holding the proceeds A) is tax free and B) is dry powder if you're looking for something opportunistic in the next 6 months.