A partnership requires three things to be successful - Experience, Capital and Time.It looks like you have the capital and experience but maybe not the time.I have my doubts about this working if you have a friend who has weak credit and a limited cash flow.

(This assumes you have a credit card available to pay for any repairs.).

Local banks and smaller credit unions are most aggressive in this space.

It's all in how conservative you are in your approach to underwriting your deals.Even when a Seller says they've improved the property, the tenants are still tenants and do damage to brand new improved units. 

I’ve bought some houses with 0% interest for a year credit cards and a few with consumer lines of credit from banks.

Most of our newer investors approach 2-3 lenders to discuss loan options.Some lenders recommend making your financing inquiries within a 45-day time period to avoid larger drops in your credit scores.All the best!

I also can take out a home equity line of credit on my current home....but I need direction. 

honestly, if you've inspected the place and there is no pet damage, why not give them the pet deposit back? 

They are very likely to respond, but keep in mind you can't get dollars from a turnip.My experience is wear and damage are higher with some S8 tenants and not at all with others, just like regular tenants.

I own the property free and clear and i use the equity as part of my business line of credit.