This is two months in with an eviction notice posted on the door.

Both of my properties have existing mortgages in first position and the existing first mortgage lenders are recommending a cash out refinance. 

If you are cash flowing positive without paying 100% cash, then you are not paying the added $150k + 65% interest...your tenant is.When you buy a cash flow property, the cost to you, is what cash comes out of your pocket...and your tenant pays the rest...as long as you are CF positive.When you pay $30 DP, and finance the rest, those two properties cost you $30kWhen you pay $150k, and eliminate the loan, you are paying $150k for these 2 properties....and, you have eliminated any potential to buy anymore since you are no longer have any money.

I pour all positive cashflow back into the heloc as my W2 covers all living expenses. 

@Daniel Rosado If I was in your position I would partner up with someone.

Rehab funds are released in draws so as work gets done and inspected the funds are releasedHence They will never be a position where they are lending more than the property is worth 

1) I know private lenders that will loan to an LLC (Lima 1, Colony Finance, etc), but not in second position.

We are still positive on cash flow, about $400 a month combined. 

Which ever choice you make it seems that you are in a good position!

The offer is $1M higher than the capital account we would get with the developer, although once up and full we would be in a better position than selling in our equity and annual income.