If you start pooling money from people who are not full partners (i.e. have decision making power), you will start to cross into the territory of securities, in which you will be subject to SEC rules.

I am starting out in my real estate investing journey and was hoping to see if fellow investors recommend pursuing short sales, banked owned properties and foreclosures, versus pursuing typical MLS properties or off market properties with distressed properties or sellers.  

This could save you a lot on capital gains taxes if you sell later.Like what Ashish said, "As a joint owner, only her share would receive a step-up, and you'd still owe capital gains tax on your portion based on the original purchase price."

A question I have been pondering within myself for some time and figured here would be a good place to get an answer.I currently own a home that has close to 100k in equity in it, we plan to move in 3-5 years to our long term house and would be sizing up a fair amount.So my question is should I use the equity to fund investments/projects, or should I save it and roll it all into my next house so I can have it paid off sooner/lower my monthly.

if you can "pay the HELOC off aggressively," then you should just... save up a down payment. 

Your choices are to save more money or work harder to find one off-market for a below-market price.

Start by reading the Ultimate Real Estate Investing Guide: https://www.biggerpockets.com/guides/ultimate-real-estate-investing-guide/introduction2.

I plan to use this line of credit to put down 20% on a property for a DSCR loan (DTI is too high for a vacation home/investment loan), and I do have about $20,000 of reserves saved up.

I would make the property habitable whatever that might mean fixing plumbing and paint and concurrently I think you have to do lease violations and start eviction.

I've saved my clients thousands and huge mistakes that the builder would have made them eat.