Unless you have consistent access to off market deal you will probably be wasting your time with this kind of investor.

Talk to your insurance company - depending on your deductible and potential increase in future insurance you may or may not want to put in your own claim.I would also probably consider cutting my losses and getting rid of the tenant asap.

I converted my STR back in December to avoid the newly increased Hotel Occupancy Tax (9% monthly) and to cut out my STR PM (10%/monthly).

For the first one there is a ton of data available on markets through the BP website that you may want to jump into and analyze.For the second one, $300 would be considered great to one person and a waste of time to others.

I don't think you should waste any money on an attorney. 

Are you thinking government spending is going to actually get cut and inflation was just a flash in the pan? 

As the prime rate gets cut, your HELOC rate (if variable) would come down. 

Maybe rephrase your questions or a new thread and copy in @Chris Seveney  he is very experienced lender with capacity you dont want to waste time with a bunch of fake lenders. and you brokers or HML are not going to touch this loan thats a fact.

Invest the rest.Now you've got income, a primary residence situation that's crazy advantageous, a piece of rental real estate you can cut your teeth on, minimal or no personal debt, and some active working equity investments. 

The main issue with rental basement is water if it has water issue usually it is a simple fix .Clean gutters ,discharge gutter  water away 10" away from foundation, make sure you foundation soil is slopped away from it .If you need to buy soil get a clay mix .Cut back any tree too close to the foundation look at the drip line that's how far the limbs are out from the tree .If all that is done still has water buy a sump pump  carry the water to day light away from foundation 10" to 15" .