Quote from @Alex Moazeni: You are making the common mistake of allowing a tenant to push you around.This is your property.

But ...The first thing I observed was the replacement cost portion of the quote, was, IMO, less than what it will actually cost to demolish the remains of the existing structure, pay for any hazardous waste removal following a catastrophic loss, and actually pay to replace the property in the event of a total loss, even though I used the quote feature to increase the replacement cost value by 20% (the maximum it would allow).

Interest income is interest income, unless you decided to roll some of the current cash into a self directed IRA at which point your interest income would be deferred for a later time and allow your funds to grow tax free.

It is my understanding (per our zoning attorney) that RT4 zoning should allow 3 units but whether the current construction of the building makes that viable or not is an issue.Not an expert by any means - just our experience with zoning and digging out basements in Chicago.

You have to allow time to do its job. 

Most (not all) HELOCs require that the property is titled to an individual (not LLC) and are full doc, meaning your employment history, income, DTI etc will be factors.

If transferring the property to an LLC, be mindful of the due-on-sale clause, and note that an LLC itself does not offer tax savings unless electing S-Corp status, which is rare for rentals.To maximize tax benefits, consider cost segregation, bonus depreciation, and short-term rental (STR) strategies, which could allow you to offset W-2 income if structured properly.

This would allow you to sell a property you had purchased with the intent of holding for productive investment use. 

My background as a commercial wholesaler has allowed me to build strong industry relationships, but I know it doesn't fully prepare me to manage other people's money.

I should note that this may be considered manufactured spending To your last point of the gifts funds....Per Fannie and Freddie guidelines, lenders can't allow gift funds on investment properties.