The $200k financing would serve as a purpose to be a downpayment, or do you want the $200k to be the top limit of the investment?

Some banks and lenders will calculate your Heloc payment based on the Max limit even if you only have a small portion used due to preventive risk. 

It’s not limited to rentals, but since your parents-in-law's home is a primary residence and not a rental, it wouldn’t qualify for a 1031 exchange right now.

They offer a $10K repair fund to fix damages in addition to SD plus warranty for appliance repair etc.I have no say in whom they choose to move in, whether there are animals, limit on # of occupants etc. they reserve right to inspect property so i have no idea if they can tell me to remodel, paint etc.does this make sense i have a vacancy coming up in October (bad rental timing).

I would recommend considering conventional financing until you reach Fannie Mae's limit of 10 properties, then consider either a portfolio loan, and start your race to 10 again, or look at DSCR at that time. 

@Jeanette LandFrom my experience working with over 400 investors, growing your portfolio with limited capital is absolutely achievable with the right strategies.

A broker shall not be responsible for supervising, nor shall the licensee be responsible for operating, within the scope of the brokerage or within the requirements of this chapter, activities that would be considered property management, including leasing, maintenance, and repair, so long as the real estate being managed is "individually owned" or "entity-owned" as defined below:(1) "individually owned" real estate is real property in which the licensee holds an ownership interest; and(2) "entity-owned" real estate is real property owned by a corporation, limited liability company, partnership, or trust, within which entity the licensee holds an ownership interest as an owner, trustee, partner, or officer, or in another beneficiary capacity.

And will be limited to really beat up duplexes or 2bd/1ba per a side duplexes. 

This allows us to participate in both pushing rents while also limiting vacancy exposure.

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