This will depend on your risk tolerance and your goals but you should consider starting with a single-family home to gain experience as a landlord and build your network.

Most of our investments we look at IRR (time value of money) to determine which investment is a good fit for us at this time - which factors in returns, risk and time of investment - is it a short term investment we want to get appreciation play or long term fixed income investment.

No, banks do not allow a seller held second now a days due to risk and new guide line changes. 

For example, when something unexpected comes up and your costs risk getting out of hand, you might change the scope of work a little.

However, the other option would've definitely increased the risks of stagflation.

I store some funds in a HYSA as well as lower risk investments.

Risks and rewards to this type of tenant? 

Adjust return based on holding time and risk reward.  

For a traditional Heloc at most small banks/CU's, the rate will be variable and will be WSJ Prime + a spread that represents the borrower's credit risk.

As I mentioned above, the risk of being sued, found guilty, and fined more than your insurance will cover is almost non-existent.