Here are the pros as i see it: easy (no purchase necessary, you know the property), likely prop 13 property tax discount, possibly below current rate loan.  

The borrower gets the benefit of having access to capital fast and the lender gets the benefit of charging a higher interest rate and not having to pay taxes on the profit.

Though I would caution you on hard money lending until you understand the industry a bit better, that can be very rewarding but you have to be able to do your due diligence on deals because you're turning over your hard-earned money to an individuals project, often a flip. 

Now consider this: all the groups people are spending fortunes to target—foreclosures, absentee owners, probate leads, tax liens—what do they have in common?

I wanted to work with someone who was going to pick up the phone when I called.From your first interaction with a broker/seller, show through your words and actions that you are honest and reliable.Lesson 4️⃣ - Buyers and sellers become business partners.I truly think one of the biggest oversights in due diligence is the seller themselves.

Let's assume that the neighborhood is a C class and the median income of the city is greater than 3X of the market rent.Here are some of the considerations I've come up with so far:- Units are in need of renovation and capex is too high or not available- Unit quality is not the same as market - Seller is worried about losing tenants due to increase- Vacancy rates are high or filling units have been difficult- Rent increase would take multiple increases over multiple lease periods to get to market rate if seller is trying to retain the same tenant- Seller inherited property and just want to liquidate- Seller needs to liquidate quickly (financial burden, sickness, quick exit from land-lording)It seems like I might be missing a warning sign about a deal if they are selling with current rents that are under market; but again, this seems to be most of the properties I've underwritten.And in the same vein, what should I be worried about when purchasing a deal with under market rent with the intention of raising them after purchase. 

So, instead of paying taxes on $50K, I'm paying taxes on only $21K. 

Flat is easiest to touch up but I'd rather wipe and touch up eggshell than usually repaint a whole wall due to dirty hands, etc.

In some cases interest paid on the HELOC can be tax deductible if the funds are used for home improvements.Best of luck from Fort Worth! 

Additionally, most servicers will provide the tax documents needed at end of year (1099-INT, 1098-INT) and can also issue notices of NSF, late payments and support delinquency /default.