HELOCs are not available because they are residential loans guaranteed by individuals and what you seek is a type of commercial loan or credit line which are available to seasoned companies with proven financial track record.

Investment Info:Single-family residence private money loan investment.

you can use a DSCR loan if your DTI is too high for conventional. 

If I got a home equity loan for Property 1 and used the proceeds as downpayment for Property 2 and then got a 2nd loan for the remaining 75% purchase price for Property 2, when I sell Property 2, can I use the Property 1 loan as part of the cost basis for computing Property 2 capital gains?

Keep in mind, you can’t use personal funds or your home's equity to directly fund the SDIRA investment, and all property expenses must be paid from the IRA.

What are your Loan terms and P/I relative to the cashflow after taxes?

I doubt he'll be able to quality for a loan (VA) with just his income. 

Its a tiny loan for any institution.You'll have to get hard bids from a local GC, but maybe $110/ft?

I argue that more money in the hands of the rehabber makes the loan safer.

After funding 2,000+ loans across the country I know most lenders will have issues with these 2 things.