Also, the idea separating them is so you don't accidentally spend them and then no way to pay it back when the time comes.Some states if you don't refund the security deposit within X amount of days, the penality is that you will have to pay back the security deposit x2. 

Another nice bonus of using this as a funding source is no closing costs, big help on the front end.Obviously, if all goes relatively well, the plan would be to hold these properties as rentals and refi at some point down the road when rates on mortgages drops back down a bit, whenever that may be.

Hey @Chris GarnesI just came across your post, and it immediately reminded me of a project I handled with a colleague in San Diego, Dennis Bragg - https://www.biggerpockets.com/business/page/3607  - You’re sitting on some serious potential with these two properties, and your plan to step back from construction while finishing them makes total sense.For Home 1, with no mortgage and a prime design upgrade underway, you’ve got flexibility that most investors would envy.

Property manager (PM) 's lawyer continued the case to get the unpaid rent from the tenant.PMA between landlord and property manager(PM) has also expired so landlord got the property back , but when landlord requested to settle the account and the deposit( there is one month deposit from landlord also), PM refuses since the lawsuit is going on with the tenant, Additionally PM is still charging the monthly property management fees from landlord even though landlord is managing the property.Landlord is done dealing with PM and requested the PM to withdraw the lawsuit against the tenant ( landlord is aware that he will loose 2 months rent), PM came back saying they cannot withdraw the lawsuit since that will violate fair housing law.QUESTION:Does withdrawing unpaid rent case against the tenant violate fair housing law ?

If I understood what I was getting on the back end I would have done this sooner.

so if you're impatient and just buy something random it's not going to work and you'll just set yourself back.

Ideally a HELOC is used for less then a  year project where you can refi or sell to pay back the HELOC. 5 years is a long time, things can happen and if you reduce the cashflow on both properties you'll be increasing the risk and having thinner margins.

Some might not be livable at purchase but 5k still seems cheap unless there is something off with the data. maybe the prices were reduced on unlivable properties due to back taxes being part of the deal for the purchase.

@Joshua Lanzieri when renovating older properties there are almost always negative surprises.Go watch any HGTV renovation show and most of them will have this as a cliff-hanger, forcing the choice of either going over budget or cutting back elsewhere.10% overruns happen often, but 50% is NOT acceptable!

They seem to keep going back and forth on this issue.