Prime is currently 7.75% and likely to drop by 1-3% during this fed cut cycle over the next 1-3 years.  

Invest the rest.Now you've got income, a primary residence situation that's crazy advantageous, a piece of rental real estate you can cut your teeth on, minimal or no personal debt, and some active working equity investments. 

Expect to allocate less time  towards management functions if self-performed or more favorable management fee structures if 3rd party management companies are utilized (which ties back to #1, as well).

Cuts out 80% of communication and collecting demands with tenants. 

Or she just cuts you out of the deal somehow and doesn't give you a penny and she's dating a mixed martial artist bouncer now so what are you gonna do, etc.

Seller has $405k tied up in the deal, 2nd lender has $95k tied up and you have $0.

It's important to understand the difference, and I'd recommend sticking with the REIT with depreciation advantages.The Tax Cut and Jobs Act (TCJA) includes a 199A deduction and applies to certain income from pass-through entities (including REIT dividends) and allows individuals to take the 20% deduction against REIT dividend distributions that yields an effective tax rate of 29.6% or 37% (80% for upper bracket filers).

LOC on business purpose doesn't really make sense from a lenders perspective.Think about it, you have to tie up funds and not earn a return until the borrower wants to use them.Time is money and if your lending money you want a return each day your money is out.I'd strongly recommend just going with a cash out refinance and avoid spinning wheels looking for a LOC. 

Therefore, the reason mortgage rates have gone down 1.5%~ or so over the last three months is due to the bond market pricing in this cut and future cuts.

For example if the states licensing code holds the licensee to an agency relationship with their client, then the wholesaler tying up a homeowners property for a below market price may be in violation.