I am already on the hook with interests being accrued with the family loan but have no rents to offset the high repayments. 

To Bruce's point, this property is accruing $100/day fines.

Businesswise, is there any benefit that can accrue in/from this setup, and is this normal in business or it's just starting to get convoluted for not much of anything really?

Therefore, they call the shots about how they choose to protect their loan.Every day of delay means accrued interest. 

The interest is still accruing.

Did you throw in any other special financing terms, accruing the interest for the first couple years? 

I sent him over a text today stating that I would not accept rent through cash app again and that he would need to use the email and password given to set up his payments or I would not accept them otherwise moving forward as we’ve spoken about this already and late payments would accrue.

Like I said previously, it’s a good strategy for growing your portfolio as long as you’re comfortable with the numbers being able to cover the payments you’ll be accruing from both the mortgage on the FHA property and the added payments from the HELOC.

Don’t buy it unless you are Sure there is plenty of equity after you add your purchase price to what your best guess of the 1st mtg balance is....with taxes, insurance, accrued interest/fees, etc. 

If you're just talking about the original mortgage on your SFH, then why does that matter - you're about to accrue more mortgages by getting into real estate.