The rehabs I have done in the past were all do-it-yourself so the cost was much less but there is so much here, I won't be able to do it all.Even if they accepted a 30-40k offer, I would have alot of cash tied up in this and if the ARV does not come out, the refi may not work in my favor. 

Things to save money on here and there are painting yourself if you can do it well, light fixtures, GFCI (you need one but not every outlet because you can tie them in with each other), tearout.

It sounds like your rubbing it in their face or tying to prove them wrong. 

I imagine having separate checking accounts for each property so that all income and expenses are tied to each property to make taxes easier, expense/repair tracking etc.

Are they tied to the property or the tenant. 

@Minuit SpenceI've been in your financial shoes before and it sucks (never had the huge family situation though). 

That would at least be SOMETHING, and so it might be better than leaving 1.25 million of equity just sitting on the table untapped, but it feels kind of disappointing because it ties up a huge chunk of equity and fails to fulfill either of my two main goals: generating monthly income, and serving as a significant vehicle for further expansion in the near term.Several apparent ideas I'm actually NOT interested in trying are: investing out of state, partnering with other investors, and expanding into parts of NYC that can still be called "bargain" areas (in the later phases of a multi-year superbubble like ours, such places tend to be mind-blowingly distressed and they are simply beyond my comfort zone).

Take a step back and go into the seller's shoes and then re-try.   

Where you need to be careful is if your market is tied to some microeconomics trend that would cause downward pressure on housing prices, like one industry or employer town where that employer or industry is shrinking and demand for housing is decreasing.

I may switch this in the future to limit the bank's power over my money tied to both.