I don't do this for a living and have no real world experience, but at 40% down, even with a 7% int rate, that seems like a high monthly payment.

What interest rate are you getting?

Not many markets out there in post covid era with 'great cashflow' now and definitely not until rates come down.

They focus on finding deeply discounted deals and assigning contracts, which they feel doesn’t require a license in some states.6.

You can do this as a rate and term refinance with no cash out, or a cash out refinance. 

I think most investors want to win on more than just the interest rate.

Keep in mind a HELOC rate will be much higher because of the CLTV and risk.

But i heard that there's scammers who prey on new listing discounts to try to take advantage of new hosts.. is this something I should be concerned about?

Reason is a Heloc generally carries a higher rate on a shorter term and "Can Never" be used as an "Asset, or for PITI reserves" which are both required when you buy an investment property. 

Their lease is 6 month term with a same rate month to month however, their insurance states the rebuild of their home and fire investigation efforts are going to take 12-18 months.