If you are not in the trade or business of lending, the interest will be considered portfolio income.If you are in the trade or business of lending, the interest will be considered ordinary income.

A Heloc is a open end mortgage like a credit card so its an additional trade line on credit, cannto never be used as an Asset, PITI reserve, and its a DTI killer in most cases.A heloc is also usually set up on a shorter term versus a mortgage, carries a Higher interest rate, and most carry a interest only with a prepayment penalty.

I also looked into International REITS, funds that are traded on the stock market.

Soft assets like specific stocks and preservation phys assets this may not apply to, but you keep those at low % in your portfolio and actively "trade" those. 

I’m not at a place where I can altruistically give my time without trading it for income.

Ok, great, but the troubled loans in his portfolio won’t be able to refinance into GSE debt without massive cash injections by the borrower because agencies are topping out at 60-ish LTV (current value).I agree with you that there is an opportunity here—but I wouldn’t want to touch any of this bridge debt unless bought at a very steep discount, and so far those trades don’t seem to be happening.

I am already seeing positive signs including far better dialogue between the building trades and local government.

Plumbers, electricians and other trades can easily charge well over $180/hr).

There are trade-offs for each city, so you need to better define your goals.

On the 2nd I hired all licensed trades but separately.