And consider that if they had put the money in a good MM, they would be getting 5+% right now

It'll be more work on the front and back end but can be a great way to make money.

I would use that as a potential guidemap as to where you may need to spend some money. 

I personally do hard money lending and investing in the city.  

You may have to balance spending money on things today that you may not really need until later - but, they may cost a LOT more to change later.

Last year I barely made any money after all expenses were paid.

Anyway the point on the land basis is if you have a very low basis you have just now subjected your land equity to ordinary income and market risks on top of it.Plus personal risk on the loan if it goes bad do you have the money to pay the first off if you need to.  

Growing up in a household with 6 siblings and parents working hard to survive living in California I became very observant of what others were doing to make money.

Another consideration is to get a portfolio loan that will take on both properties at an average rate which will give you capital through a finance (refi similar).

But again if your dealing with low value and your OK if your title is buggared you just give the  buyer back all their money that probably works.