Midwest has inflated over the past 5 years (as everywhere else), indexed to cost of new construction.

In other words, you will incur the cost of demolition just to get the raw land.  

I looking to take action Can anyone help with some questions I haveWill this property cost me to much down the road?

You would end up saving the higher interest rate on the HELOC as well as closing costs.

It was just an offer (costs extra) through a local lender I used!

Take their ARVs and cost of rehab with a grain of salt.

Your property is fairly destruction proof, costs near nothing to maintain, yet you can charge above market rents.If your property is nicer (class B) where the carpet alone might be $6k or more to replace when the tenant spills hair dye everywhere, you won't be as happy as in the situation above.  

Use tools like the VA loan for house hacking and your Basic Allowance for Housing (BAH) to cover living costs while building equity.

You are still going to have holding costs and a heloc will just have less holding costs that you would if you were doing a personal line or hard money. 

He said it kept the bank from having to execute the eviction process, it salvaged the owners credit by not having a foreclosure on it, and the buyer gets it a much lower cost, because of the leverage of the impending foreclosure.