I'm going to cut to the chase: a so-called "contractor" had his employees do some work in one of my rental units. 

Almost all my tenants are paycheck to paycheck and barely making it so I cut them some slack.

I don’t have the down payment yet but I’m sure my relative will want the lump sum at some point.

I have been updating the house and making the mortgage payments in the seller's name (kept his mortgage). 

If they use hard money lenders those loans are EXPENSIVE loans because they are short term loans with no early payment penalties and they will also finance rehabs.

Rental Activity Eligible for the QBI Deduction Under the Tax Cuts and Jobs Act (TCJA) tax reform bill, you can deduct up to 20% of your qualified business income.

I don't even have a payment system or anything in place.

Is it a bad idea to use a HELOC to pay the down payment for my first short term rental investment?

Me and my fiancé are wanting to try and purchase new construction homes in class A to B neighborhoods (275-350K) and put 20-25% downs and live in them for 1-2 years while we save another down payment and then eventually move on and make it a rental.We are not looking to scale rapidly.

And it's super cheap to advertise there (you pay a listing fee rather than a cut of each booking.)