A good DST would absorb the rest of your debt nicely.

To Sum it up, its a good idea if you can exceed the cost of capital (higher rate than your cost of debt) with what you earn on your heloc/debt you pull out and invest.The question is how much gains above is enough to substantiate the risk of your variable interest rate, well thats up to your personal investing criteria.

Even if a title company were to manage the setup making sure all parties are paid, the cheap debt and cash flow would not be enough to be enticing to any investor even if midterm rental could yield a healthy return. 

We have tried multiple local collection agencies, and we have not received a penny for over a hundred thousand dollars of bad debt submitted to them.We keep hearing, "It takes time" but it's been well over a year with the most recent one.

Depending on your debt to income, you might have to sell or have an executed lease to secure financing to buy the second home.

If you have a lot of equity and little cash flow, you should consider accessing that equity to use elsewhere.Another factor to consider is your interest rate on the debt.

I calculate the returns on the entire investment, since your debt applies to the entire investment.

If you can purchase this home with private money or seller financing and get a $110k loan, then you could do a rate/term refi right after so do a 90 or 120 day note to secure the property and get it in your name, then refi into long term debt using the full appraised value. 

Forgive me kind folks here for the many questions, I consider myself a newbie and believe that even if my questions are basic and many, I persevere and try to know from resources and of course great folks like you all here to grow and learn to make the right decisions.

Debt is rarely a factor in their issue. the ultra wealthy I know  with a few exceptions have very limited debt.. to no debt.