I'm torn between trying to liquidate it at the sale or keep it as a rental.

The down side is you make 25+K from the note or you get to sell the collateral as the owner near market value.BTW, the appraisal isn't done as a market value that brings a property to it's highest and best use necessarily, it is a liquidation approach at times, quick sale that will be lower and it sounds like the place is ready to fall in, it might be limited more to the land value. :)    Just read your post to me, I'd probably not foreclose, get a deed in lieu if the owner walked away, the Trustee will most likely approve that on a secured debt, means there can't be any deficiency judgment post foreclosure.Actually, I wasn't invited to play, but that's okay, LOL, :)) 

I am leaning toward the SFR option because I believe there is slightly less risk in liquidating the properties.  

I have about 100k liquid and 65k owed on a rental property valued at approx 270k.

Sell the lots to liquidate some cash to invest.

Sometimes the banks will require a tenant and lease before they give you a line of credit or offer to refinance, it depends on the bank, your credit and liquidity and probably many other factors.

Essentially, your HELOC is liquid as long as you are still in the draw period, and you are saving yourself some interest payments at a rate far above what you would get as "cash" in the bank.

You can do this on your own or there are robo-advisers that specialize in TLH.Margin Availability - Another reason to add a greater percent to a taxable brokerage account is you can always access additional liquidity through margin loans.  

We take the deals one at a time now and make sure that we can carry the property using a combination of cash, liquid investments, and HELOC If we had to do so.

To answer from the hotel side, you could try searching for hotel liquidators in your area.