We plan to share ownership of the property as I am going to invest my money into developing (building a Detached ADU in the back) and re-modeling the property so that we can collectively sell it for a profit.

After my P.M. costs I collect $940 or so/month. 

Property owners are a prime source for collecting revenue.

Getting analysis when starting out is pretty common, buying that first deal is a huge leap of faith. 

He was the only one who was not a good and faithful steward.

Also, focus on 2 years of job/income stability.Class D Properties:Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciationVacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions.

Forget collections agency.

Perhaps if your partner was a general contractor or handyman type there may be some merit there to reduce costs / increase profitability.If your partner enjoys deal sourcing, a better move might be for him to become an agent - so he could legally collect commissions from finding deals and managing properties for multiple people. 

But I wanted to collect some recommendations in the meantime. 

That will be tough to use your HELOCs together to get another loan because of your collective DTI so it will depend on that.