If you had reasonably good access to capital and a very talented construction/maintenance team at your disposal with excess time on their hands, would it make sense to start flipping houses?  

Once the HELOC is in place, your minimum monthly payment drops, increasing your disposable funds.  

Since then, we found the crawl space area has a lot of items and junk that we need to dispose of (again, we still wouldn't be able to prove if it was the tenants that just moved out or the tenants before them).

A little bit of background on my situation: I was raised by both parents with very little disposable income but my grandparents and the rest of my family were very well off.

Mixed use a lender likely will only go to 65% ltv or less as they are harder to manage and dispose of.

Hard Money can be a useful tool at your disposal.

There is more room in a property that is in distress, needing a lot of work, the value of the materials and work, holding costs, cost to dispose the asset all come into play to justify a lower offer.

SO...this will leave me with around $1500 (+- $200) each month of disposable income to use for investing after all my bills are paid and we pay ourselves (savings/retirement).

The big variable is the overall weight to dispose of.

You may be able to narrow the discussion to what percent of ARV they would be able to dispose some of their REO inventory at for the amount in the briefcase or the deposit.