Show the lease agreement, show his rent payment history, and show any written evidence from the tenant that he admits to being late/unpaid.

If so and the monthly payment isn't too bad then you're still moving the needle forward if your main goal is wealth generation and not just cash flow. 

I don't like paying interest on my down payment unless I know it's a temporary aid to get a good opportunity.

You could offset your mortgage payment on a bigger house with the cash flow from the rental. 

Higher rent, guaranteed rent payment, collections and damage you just call their commanding officer.  

BUT there have been 24 late payments with the last late payment made in Nov 2024 and  0 paid on time.

A $100k Heloc payment will be around $750 per month (verified with el sereno client) and rents are $2,300 p/m so you tell me if this is a good idea or not. 

What type of transaction fees should I be looking to pay and is there a down payment required?

Personally, I wouldn't use a heloc to then go purchase a primary residence, unless what you can rent the current SFH for enough to cover the current mortgage (assuming there is one on the property) and the heloc payments.

That rental income helped us significantly offset our mortgage payment.