I don't like seeing a bunch of blue haired nerds running around crying about how evil their landlord's are for forcing them to pay their rent on time, but I don't want being a blue haired nerd to become a criminal offense.

I would only use the heloc if you plan on cashout refinancing one of the properties to pay it off once the rehab is complete. 

Quote from @Jake Handler: For anyone that has been a buyer or seller of a seller finance property, what method of payment and tracking did you use for buyer to pay seller monthly? 

I think I'll have to wait 2-3 years to pay for the renovation unless I take out a loan for the shower renovation.

20 townhomes sounds like it would be sales, but I don't like to assume. 

You need to read the sheriff sale information carefully, or if in a county with a magistrate then read their ruling. 

I found this deal listed for sale on LoopNet.

If you do have a TX LLC just to hold a TX property, you still have to register in CA as a foreign LLC, which still means paying the CA LLC tax.

Quote from @Leeling Chew: It doesn't matter who pays the bills.

Furthermore if they are always paying they probably will stiff you in the end if they know they aren't going to get the deposit back.