Joseph,I think Owen's advise is your best route to finding out how the price compares to other options.  

Once you have the HELOC funds, you should look into a loan option that covers the rehab budget.

In addition to the other advice I would look into lease options otherwise known as rent to own.

Yes, there are groups that specialize in TIC options for 1031 investors. 

My wife and I have 3 options: 1. stay where we are. 2. buy a second home and rent 1st. 3. sell our home and buy another home.

The only option you have really is to offer cash for keys.. so if you really want it, you just have to decide how much it is worth to get them out. 

@Nidja Bell A DSCR could be a really good options, especially if you've owned it longer than 6 months. 

It may just be a matter of what kind of lifestyle I'd like... but wondering if there are more lending options to use that equity that I don't know about/creative financing that may make it more interesting to hang on to. 

We’re not sure of this deal is going to be able to close without our seller as the official owner, but there seems to be no other option.

There are multiple options and strategies you can deploy in the area.