Not sure who you're using but I have a mix of State farm & Foremost policies, State farm for me is about 30-40% less with very similar coverage (deductible is slightly higher & they don't cover flood damage).

Pulling the money out pushed me into the next tax bracket and I lost all of my rental deductions. 

On one side it is nice he is taking care, BUT  I am worried about falling into a game of repairs and maybe rent deductions all the time.

Basically, in cases where you take on debt in order to make a distribution to the owners of a business, the portion of the debt related to the distribution may not be deductible. 

How does the company deduct their fees, and how much do they charge for their service?

Currently he is clearing roughly 2300/month in rent after deducting utilities, which at 115k purchase price is at the 2% mark, assuming @Joe Villeneuve's calculations of 550/month in cashflow is accurate, that puts it at roughly 23% CoC assuming 25% down payment. 

Also, keep in mind if HELOC Is used to purchase an investment property the interest is tax deductible!

I would only spend money that is a benefit to you (e.g. improves the value of the property) that also creates an immediate tax deduction for you.

Sure you can sell the home when you retire but will the proceeds of the sale after taxes and broker fees really net you a profit after a down payment and decades of property taxes, debt service, mortgage interest that you can no longer deduct from your federal taxes, repairs and homeowners insurance?

There are brand new pass through deduction rules that are pretty complicated but can give you a big benefit if you qualify.