And that's if everything were working correctly, which at this time things very much aren't and the poor investors targeted for these schemes have been stuck with loss of principal or unable to access their money and not receiving any distributions. 

There it a principal called thermal mass .

You end up making the difference in the principal of the mortgage and the price paid for the bond.  

I get the $25,000 to $50,000 Option fee for my pocket, and I can buy another property, plus I get about $8,700 a year in cash flow and the principal pay down and the equity capture and the tax write offs.

(usually something more like five years)Will the total principal balance of the HELOC be $120K - $130K after renovations?

I find this model very hard to make successful unless it is an owner occupied and they are the principal manager of the RAL.

What many investors are learning is that this leads to terrible outcomes including paused distributions and loss of principal invested.You are technically correct that debt will always multiply returns.

At 25% down I’m looking at roughly $2300 for principal, insurance, and taxes per month on a 30 year loan at 7.6%. 

They forget to mention the $43k is not their return, but return on principal and thats all you are getting from your original $120k...

Plus, the return will grow with appreciation and principal paydown from rent.