I have been debating this for a couple of months and have found conflicting recommendations online.

You wouldn’t want the first and the second to go higher than 70 - 75% of the ARV.

Beyond that, with 38 fet of height you can avg. out to about 8.5 feet ceiling heights if you are to build 4 stories but that usually short changes the commercial space, so you may conclude 3 stories is more prudent (depending on the marketability of the commercial space and number of residential units you can build).2.

It's better than what you'll get from most attorneys and what you'll find on the internet. 

I am a buyer of type C multi family properties and usually turn them around.

(But I'll try to give you a bit of a primer to help you out).First and foremost - in Florida - Foreclosures are usually ALL CASH transactions - meaning financing isn't an option.  

Will have the opportunity to buy a couple of properties in the near future.

A HELOC is probably the most reasonable option other than selling to make some equity available since you would have control over how much and when its used and only pay interest on how much you actually use and when.

We put both houses in the MLS and have had to reduce the price by more than 14% and still no offers. 

You will be required to show reserves (usually 6-12 months).