My goals would be to increase monthly cash flow and have more access to the property's equity for things like Cap Ex, etc....Here's a blurb from a lender's website:"By combining banking functionality with home financing into one dynamic instrument, borrowers are able to save tens of thousands of dollars and years off their loan""Designed after popular programs around the world, the All In One First Lien HELOC is the nation’s first transactional offset type-mortgage program.Home financing and banking combined:Deposits lower your loan’s principalFunds remain available for expensesInterest is calculated on the average daily balanceThis lowers the monthly interest paymentsTens of thousands of dollars can be saved over the life of the loanMortgage freedom can be achieved in half the time or less

Since you're not even sure if you want to be a landlord then take the bulk of the money and pay off any debt. 

A combination of both.What do you think is the best option?

The modest purchase price, combined with an ideal renovation budget, presented a prime opportunity to improve the home’s market appeal.

I'm not a fan of their debt when I'm not in control. 

I opened my account on Aug 15th, and during the last ~3 months, my portfolio has gone up by a combined 1% (appreciation and dividend). 

Eliminate debt, establish a budget, and save.

PAL rules have a curve that drops to zero at $150k of combined income for couples.

Now if rents can go to 1,100, different story.Value is based on Net Operating Income, and lending is based on Debt Service Coverage Ratio.Gino

So it really comes down to risk management and how comfortable he is with debt.