You will find this is a cheap fix compared to the cost of private or bank lenders.Also, for single family ( 1-4) investor loans, Fannie's limits on investor loan is a little more complex than you explain.  

Get multiple quotes and compare them.

Four comparable homes within a 5-block radius have sold for an average price per square foot (I was a local appraiser here for 6 years) that would indicate a sales price between $87,755 and $89,863.

Hi Ian, don't use single family comparables when valuing a 2 family, they are different animals.Try first to use other 2 families in town with different bedroom/bath counts.

I spoke to an appraiser and he said these are not eligible for use as comparable sales. 

After i'm done, I'm able to do rate and term refi's which local banks are much more open to doing as compared to cash out refi's.And I've actually brought a couple of other investor friends to my lender and my previous lender.The key is that the terms have to make sense for an investor to incorporate into their model.

If you've decided to sell the house, my recommendation would be to do an analysis of how much it would sell for given various different rehab scenarios:- No rehab- Light rehab- Medium rehab- Full rehabYou can define those terms above any way that makes sense for your house (and you can have many more point for analysis as well).Once you have the likely selling values for each of those scenarios, compare the cost with the potential profit (and the work involved) and take the approach that maximizes your return.

Compare them and don't be afraid to ask them if they can do any better.

Fundamentally, to the extent of my knowledge, the Bay will still thrive and grow for a long time to come.But the question of: "Is the cost of living in the Bay so high compared to the rest of the country (maybe historically, or just the affordability index) that it is now a very attractive option for a ton of people to start moving elsewhere?  

Hard money is really expensive compared to conventional financing, but does allow alot of flexibility.