Generally speaking, you're paying for this feature in the form of higher-than-market interest rates, and interest-accruing balances that are not often paid down. with FHA allowing for 3.5% down, conventional allowing for 5% down (and 3% down in some cases as well), the barrier to entry is not massive. if my mother were asking these questions, this is what i would advise her. small down payment, but a significantly better loan IMO. hope this was helpful! 

I am told my debt to income ratio is too high for the balance I need, however federal underwriters will not allow the use of rental income on any of my properties.

It is a balancing act to try to build to the optimization. 

Additionally, on the balance sheet, you will reduce your cost basis in the property by this deduction amount.Are partial deductions allowed?

Even if I never see a dime from the 2nd, that entire balance would have gone to the IRS and FTB anyway. 

As you get more units in a property, there are more checks and balances. 

I'm guessing season is pretty short, so would have to make pretty quick money to balance rest of the year.What does investment market in your area look like?

Usually, the buyer makes up the difference between the sale price and the note balance with cash at closing.  

The HELOC shows up as $75K, but with a balance of $0.

If you invest early and often you can easily achieve that hockey stick graph for your investment balance.