You might even be able to get out from under the built up tax liability.With your asset amount, maybe its possible to sell out / 1031 to a REIT, and still cash out leaving behind the tax liability. 

Investment Info:Single-family residence fix & flip investment.

So what if the heloc amount is enough to cover 20% down on investment property and cover renovations.

:Class A Properties:Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Vacancy Est: Historically 10%, 5% the more recent norm.Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.Class B Properties:Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 yearsClass C Properties:Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation.

There is nothing about how long you need to occupy the property for.So unless our lender puts a demand on us I see no problems legally in occupying each property for any amount of time to fulfill the requirement, then rinse and repeating this process up to our full entitlements, so long as the lender is willing to keep giving us loans.

Also, the amount of damage was so expensive to repair that he simply could not afford to fix the more damaged units.

Accepting even a small amount can complicate the eviction process and potentially delay your ability to terminate the lease in court.

From a $ perspective you get the same amount of appreciation, depreciation, loan pay down, but here you have cashflow and if if a tenant moves out, you are only 50% vacant instead of 100% vacant.- Generally the same logic applies as above.  

I've seen a few foreclosed properties around my area for less than $50k in neighborhoods where it would appear that if these homes were really fixed up they could ARV for $120k (or more).

It could impact your home equity and financial security.For a safer and more specialized alternative, consider a Fix & Flip loan.