There are some legal considerations as well as practical considerations 1.  

I'm a GC as well and did the math, the Heloc would save considerable interest because it would average on 33% of the balance borrowed at any one time (and thats assuming constant deal flow).  

@Adam F. your real estate attorney should be able to tell you exactly how much this costs.

Flipping homes can be an amazing business model but there is definitely a higher chance of you losing money then other avenues so if your afraid of costly mistakes that might not be the best way to start then.

They’ve likely invested a considerable amount of time and money into it.

But for an OOS investor one consideration is access to support, first of all PM & contractors, and you have more choices in the much larger Milwaukee metro area than in a smaller submarket.

Does the bank take into consideration the income from the other units?

Also I understand the funds aren't available for the improvements so that is another obstacle that has me leaning towards price reductions to move on as soon as possible.The exit of lower tier SFH's is something very few investors care to consider when making their investments but deserves far more consideration. 

In return he will place the down payment, closing costs and IO payments during the HML.If the property is initially purchased by one LLC (Ours) and there is an active loan on the property, is it possible to register half of the property under the name of the investor's LLC as part of our model?

I don’t know  the specific details of your situation, but there are other considerations and options as well.