My assumption is you can only have one primary residence during this fha year and if you decide to sleep on the couch in your primary residence or at a friend for a few months in that year its ok and im free to rent out my unit during that time.

If you think 6.5% in 5 years is conservative, as an investor, I would be asking you about why you are making that assumption.  

You'll have to make some assumptions on what the HELOC rate will stay at to come to a conclusion but it's not that difficult to get a decent picture if you pull out a pad of paper and start scratching away.

The market I'm looking at for example is 10% (which is what is used as a general assumption I think).

Been spending the past 48 hours putting an offer together and kicking the tires on my model assumptions - the returns look great, especially under a STR strategy but this property could be a flip or buy/hold - lots of optionality. 

While there are other factors that can affect premiums, I can help you with the math so you can make educated assumptions going forward when you analyze other opportunities. 

This will be my second year 1099 and the amounts are quite different (15k first year & 100k second year) so I am under the assumption they take the average of the 2 years 1099s and 2 years Ws for my personal sake. 

Based on my assumptions where I have to fill in the blanks, I say sell

But I would have the 30K in addition that I would be saving by not doing the rehab, so 120K, 40K less.Are my assumptions making sense? 

I think if you take a look at the ADRs of 2/1s in the areas within your budget, compare it to your purchase price and expense assumptions, you are going to fall short on your desired 20% CoC.