The fire was contained and there were only two of six units destroyed but it could have been a lot worse.

If you are looking to hold long term the higher rates will destroy your cash flow.If you've got lots of equity and a smaller deal, then yeah, a HELOC would work. 

I love hoarder houses as the owners have destroyed value in the property that is easily rehabilitated with a simple clearout.

About a month later they both left the apartment (destroyed) and I got a call from another landlord in town who was screening their application for another place together.Looking back I don't know if I would have done anything different. 

See below, the contract reads  "  ... by one or more licensed or certified inspection services: home, radon, environmental, lead-base paint, lead-based paint hazard or wood-destroying insect infestation." 

I had to clean up after the squatters and their dog nearly destroyed the property.

Under yours, they still have passives' 25% equity share and the upfront acquisition fee despite destroying shareholder value.More power to leads who reap those fees, but if you're a passive in Lifestyles Unlimited &/or network w/ Brad Sumrok's students, those types of deals will look pretty unappealing.

Tentants would destroy things.

I worry about a renter with a leaky washer destroying my floor boards and ceiling.  

They didn't "suggest" anything.They told you to fulfill your legal responsibility to keep there rental safe.Now call an exterminator and tell them to come over ASAP and remove or destroy the bees.