I’ve done some research and have found that some banks will allow the seller finance portion from the seller to go towards the down payment of the loan, is that true?

Some of the discounts are good, but just be aware that you will be paying a payment processing fee on top of the discounts. 

Explain your situation and see if there are payment plans or hardship programs available.The BiggerPockets forums have threads on tax liens and foreclosure prevention: https://www.biggerpockets.com/forums/41/topics/766025-surplus-funds-unpaid-taxes-in-foreclosure-saleAn experienced real estate attorney can advise you on your legal rights and explore potential solutions.Have you spoken with your local tax authority yet?

Consider tenant stability, including consistent payments and maintenance of the TOH.

On the lease, he'll pay me $100/m over my HELOC payment and all other expenses, including the refi cost, inspections, title work, etc... 

One that is pretty dang reliable for performance.

Quote from @Jaycee Greene: Assuming you pay asking price, I'd estimate the down payment for something like that using a hard money loan (HML) would be around 40% of the purchase price and your monthly payment would be $2,600 with an interest rate in the low 7% range (probably need a 700+ credit score to get that).

Some gurus tell practicioners of sub-to to hide transaction from the lender by saying the lender doesn't care as long as the payments are being made.

I have a W-2 Job, capital saved up for a down payment (or two), and a buy box based on my affordability.

The two existing LTR units (on my family’s property) were built 5–8 years ago at a cost of about $80,000 per unit, so I’m estimating a 20% increase in costs for the new builds.My plan is to use the equity in the land as the down payment for the construction loan, which I expect will make closing costs the primary upfront expense.