If I was in your shoes, I would find the best way to rehab for lowest possible amount (but still make it really attractive to potential renters) and do it!

We're talking buying houses here, not shoes.  

A few things come to mind after absorbing these responses.1) Was it a bad move to put 2nd home in both of our names therefore further effecting Colin's DTI after the apartment purchase which is solely in his name in a 30yr fixed. 2) We are going to explore the HELOC options with Chase just get a better understanding of costs and amount available etc, but worried about the risk as we don’t want to jeopardize the apt (our main home), with market so high and a dip in the economy likely in the next 2yrs etc.3) @Jason Lee - We will ask accountant about this but believe his conservative view on this just like the HELOC is to fall back given Colin's DTI and percentage of assets weighted in real estate vs retirement solo-401k, IRA & Roth IRA. 

Although you, a member, or even the sole member of the LLC will occupy a unit, legally speaking, an entity does not have a primary residence and also would not be approved under HUDs guidelines, so technically this may be a breach. 

What about working in the same career, but changing work status (employee to sole proprietor)? 

The assets here are the ex-hubby's shares in the S corp, not the real estate... and yes those shares are attachable if solely owned by the debtor. 

We do a lot of partnering with local sponsors, and even though we have built successful relationships and managed successful deals, there are some issues which can come up which could be avoided were we the sole owner/manager of the asset.

A question for both of you guys is "if you woke up in my shoes what would you do?"

I think I have found a potential property but being the sole income in a 4 person household I can’t (won’t) put up my current savings as a down payment.

It chooses to be taxed as a sole proprietor and all activity of the property is reported on the personal tax return of the member.