I'd also suggest running some for-rent ads, to see what type of response you get.It's notoriously difficult to accurately predict ARV on these types of properties, because they're so niche, and the market for them is usually completely different than the market for more standard properties...For instance, a lot of lenders won't provide a mortgage on a property for less than $100k--and if that's the case in your area, that would mean that the only potential buyers for the property are cash buyers, which makes selling the property more difficult.  

Back to finance question, would it be a better decision to take the funds from the sale of the 2 acre lot and pay off the current mortgage (~$150k) and live in the current home for a year or so (in hopes that interest rates will go down) then refinance that take out $400k from equity (~$750k) to build new house? 

Unless every applicant can qualify for the full mortgage it sounds like a really bad/risky plan for the lender.

I have maybe 100.00 of liquid cash, my credit score is 577 and I have a home 3 bedroom that I pay a Mortgage too.

My parents are considering selling their home of 35 years which they only have 70k remaining on their mortgage.

My interest rate on the home I pulled the HELOC from is 2.75%, so I don’t want to refinance it because I won’t get that rate again and I would like to avoid my mortgage increasing in both properties if possible.

Well it is just previous SFH we used to live in turned into rentals, my parents knowledge in RE isn’t as good as say our knowledge in the restaurant or business industry. but i get what you’re saying which is why we are trying to pivot whilst we have the nice cash from our business coming in to help fund our deals.The thing with the New Construction is it will take a lot of my powder but i can save it again pretty fast considering the very frugal life i live and the amount i work. but crazy to say some of the time atleast right now in my area new construct is better deal than existing buildings. its crazy ik but its true

If the buyer foreclosesa. if the house is bad quality and dealing with Lennar warranties is now my problemb. now I have to be the one to make the mortgage payments to Lennar3.

so there is no limit to how many mortgages you can have. 

Do a heloc instead of cash out refi, that way you'll keep your rate on the existing loan