Unless the borrower is self employed and takes a lot of expenses to show lower income on their returns then it usually makes sense to pay a couple thousand a year in higher interest (you can pay like 4,000 a year in additional interest for DSCR if you are saving 30+k on your tax bill kind of math lol)

Imagine making millions of dollars over the course of your career and then having to pay 30-50% every year to uncle sam instead of compounding that cash over time.This is exactly what real estate professionals have learned to mitigate.To reduce their taxable income, they just buy a building every year, do a cost seg, and use depreciation to reduce their tax liability dramatically.Their personal wealth snowball grows much larger and much faster than their W2 counterparts who give most of their money back to the government each year.Following this strategy as a real estate professional is one of best ways to end up with a much larger net worth at the end of your career.

If your willing to do so, you can live in the casita and then rent out the main home and have your tenant pay the majority/all of the mortgage (depending on what type of deal you find obviously). 

I already released him from the lease as he was near the end of it anyway but I get the sense that he wants me to pay him back for the time he was there and/or his medical bills.The other thing is he left behind some belongings behind.

Or, if you pay 20k over list price on a property that is 50k underpriced, you still got a hell of a deal.

My attorney stated not only must the person who failed to pay taxes be given notice but also the squatter as well since our suit names persons who were in possession of the house. 

The hang up is getting deals formally drawn up.One idea:- I buy the property and pay 25% DP, then they provide capital after the closing and I pay them P&I over 5-10 years.

It’s paid off, I would “like” to leave it that way & maximize the cash flow while paying down the heloc between the rental & other income.  

Pay your attorney and your CPA for a customized advice. 

When you draw from the equity, you are "borrowing" it from the bank and have to pay interest.If you borrow against the equity at 7% interest and then loan it out at 15% interest, you are earning a positive 8%.