Most HELOC's only loan out up to 85% of your home's equity.You may not have enough equity in your home to borrow a large enough amount to cover the down payment/closing costs plus have a little extra cushion room for the inevitable unexpected surprises that come with this industry plus life in general.  1 year doesn't give you much to work with unless your home is in a hot market.Also, I'm thinking you're considering a Core investment, which is a turn-key rental that doesn't require any remodeling and has a low-risk level.

. $50K-$100K in liquidity before venturing into real estate investing to provide a cushion. 

If you do go out and buy a 400k house/apt, and only put down 5%,you will use the rest of your cushion.

Does the rehab factor in a cushion for unknowns?

For those who may not have a safety cushion built into their investment; programs for evictions, rental proceeds, maintenance, etc, can offer piece of mind.  

Overall it sounds like you have a fairly good method for figuring your comps.For a flip then yes you want to leave yourself a cushion for your profit and/or unforeseen repairs (along with subtracting out your known repairs).

I would request another extension of you right to rent property from the bank to give you and your buyer a cushion on the time they are allowed to be in the property.

Hopefully you've got enough of a cushion set aside to not have to worry significantly about the change.As for which direction to go, I'd say go with whichever you think would be most gratifying at the end of the day.  

If it's a "tenant", with no lease, just proceed as normal, but make sure there is enough cushion between the seller's net proceeds and the mtg pay off to cover any damages caused by the tenant.

I should still have about a 10k-15k cushion in the bank come January after the remodel which helps me sleep at night and then for the most of 2016, again the added revenue going into the new year and remaining 3/4 of the land contract.