Below is the monthly average number of preforeclosure leads based on number of filed NOD, NOTS, LP occuring per month (from 10yr of data from recorders documents).

Is it perfect — definitely not!

Since you're in Texas, I'll use a town like:  Each town will be different based on the population living outside of town. 

Based on the growth in that area, I suspect I will be able to refinance within the 5 year window and not require any cash into the deal. 

Since the rent roll was too low, she had to secure financing through a private lender that based the loan on market rent rather than the current rent.

I adjust pricing based on demand, like raising rates during peak season or local events, and lowering them in slower months to stay competitive.

Unless youre in a call center like Rocket, nearly every serious MLO role in the industry will be commission only and self-generated files, meaning you eat what you kill; very few reputable places provide leads or base pay. 

Though it may cash flow well based on their current debt service, when you compare the income it produces to the equity they have is it actually even a good investment for them from an ROI perspective or would they be better off liquidating and redeploying?

I am based in Virginia and licensing requirements here seem manageable.

HELOC on the TH you're living in sounds the most doable (banks have more appetite to lend when it's owner occupied).Two cents - HELOCs can be great, but it is still debt and you'll want to make sure your base case expected return makes the juice worth the squeeze.