Only you can decide what is best for you, but you seem concerned more about upcoming repairs rather than your overall financial situation. 

And your hard money lender is more concerned about the ARV. 

However, my agent is also an investor, which concerns me.

Really, I think that's the final step to maximize efficiency and stability with reserves.What are others doing out there for their reserves and capital management concerns?

My biggest concern is being able to compete effectively against others in a condo complex.

I've done a search on BP and have read a number of threads strongly recommending replacement of knob and tube so I am familiar with the safety concerns.   

I've done a search on BP and have read a number of threads strongly recommending replacement of knob and tube so I am familiar with the safety concerns.

People do not move out of CA for weather concerns. this is the issues with Silicon valley  many have to live out in the Central valley and commute 90 minutes or more one way per day its a grind.But CA silicon VAlley is not going anywhere all you have to do is drive around for a half day and see one after another multi billion dollar projects going on with new tech companies I have never even heard of.. its astounding really.

I was a little concerned on how easy it is to refinance out of the FHA loan as far as approval and timing etc.

You may also decide you are not concerned about the title issue involved.