But because we don’t depend on our real estate investing income for survival, if there is a market correction that causes a decrease in home values more than 20% and rents to drop 15-20% also, then our cash flow may temporarily go down to zero.

Your issue is that you can't get a heloc.But I gotta tell you - to decrease legal density just to get a finance instrument seems incredibly short sighted. 

Is there a rental cap already in place and are they trying to decrease it? 

I had to drop rates to get empty units occupied because there was a lot on the market, but never decreased rent on current residents.  

This will decrease my cashflow but increase my cash on cash return.

Wait until the market volatility decreases and things shake out?

plug in your payments and you will see how your interest decreases from early payment.

We would like to continue to buy notes and hold in our portfolio but we anticipate our capital to decrease in the next few years if we continue to purchase , so looking for sources to hypothecate our portfolio and borrow more capital.Any advice on this strategy and sources would be greatly be appreciated.

Financing is important and owning in the right city & location.Using a property manager can often increase your ROI, rather than decrease. 

@Bill Keast From the appraisal side it would make sense to include it, but when it comes to making offers when those values aren't included the true value of the property is greatly decreased.