I’ve got a distressed and on-market house that was recently completely renovated until the couple ran out of money (all of the heavy lifting has been done, just a few things left), and it is listed well below market price compared to surrounding comps I could find.

,...the one that makes  you more money. 

If your potential numbers already look good, you most certainly won't regret the money spent on a designer!

You will only have one opportunity to get money out of an approved tenant.

Purchase was $188k and has been depreciated for 12 years to date.The online Capital Gains calculators show an outright sale losing over 30% to capital gains, depreciation recapture and the 3.8% Medicare tax (an extra stick in the eye).

Quote from @Aroldo Gonzalez: If you borrow money from your current property, that will increase your debt and reduce - and possibly eliminate - your cash flow. 

Rather, it will be considered earned income... and if you have losses especially the first year with a bunch of start up costs and depreciation... and if your money is at risk (let's assume Yes), then this business venture can offset (or add) to your W-2 income.This is how short-term rental loophole works.

I've been told I can get rehab budget (basically hard money terms) but I'll struggle to get commercial financing given the number of units and valuation.

Being that I own it outright, and only need $125k (budgeting for unknowns), not many hard money lenders have been overly interested.

Failure is not an option in anything that I put my time and money into.