In addition, a series of events, like 1871 Chicago fire and the equine influenza outbreak caused a series of defaults that lead to the panic of 1873.

Had we messed up and they needed to liquidate the house, they're in a far better position to mitigate losses compared with a foreclosure.

There is no way to mitigate that risk.

Yes it can be mitigated but it’s impossible to prevent 100%.

Sometimes we up the deposit to mitigate risk. 

I’m thinking of just requiring a co-signer and possibly a double deposit to mitigate risk on my end but wanted to hear how others have dealt with this kinda situation

I  can't seem to understand the dynamics of doing this since we now have this large loan that would mitigate us from additional loans, as least in the conventional sense.

Using a HELOC is a great way to use the cash in the walls of your primary residence to invest in other cash producing assets that kick off returns higher than the cost of the interest (which is arbitrage), however, you are risking your personal residence if it goes bad so it is very important that what you buy with those borrowed funds is properly underwritten and risks are mitigated as best as possible.

I just sold a 7 unit with SF and included a pre-payment penalty for 5 years since the taxes would be incredibly high for me.Is your seller offering SF for tax mitigation or is it just not in bankable condition or some other reason? 

The existing investors, you can refi, return capital (while they still retain their % ownership) and then can invest that capital into a new offering, to mitigate any rebalancing and agreed upon valuations of existing assets.