Because the 8% is only on the principal that gets reduced each month and when that principal comes back in the door, its not getting reinvested immediately.

There are some benefits to having an LLC on reduced liability, but there are more expenses. 

Price RangeDefine your financial boundaries based on available capital and borrowing ability:For Class A & B, financing typically covers 75%-80% of the purchase price, allowing you to buy properties in the $6M-$12M range if you have $2.3M total cash.For Class C & D, due to higher risk, the price range might be reduced to $5M-$10M with the same cash.5.

This would obviously reduce my cash flow on both properties, as I would be paying the minimum HELOC payment plus extra towards the principal to pay it off quickly.

There are a few ways you can handle the renovation which all comes to personal preference.

We have offered to allow her to pay a reduced rent for the first few months as well but I am worried that may create some sort of limit on how much we can raise the rent on her in the future.

The most important thing is to know the details of your local program like the back of your hand, then look for loopholes.Just to give you and the other BP'ers a deeper handle on why some TDR programs work and some don't, I just uploaded an excellent study on the topic to my FilePlace at http://www.biggerpockets.com/files/user/ChrisNewma...

My tax advisor referred me to them, and I also utilized cost segregation on the properties, which significantly reduced my tax bills.

Hi, pre foreclosure in all of its permutations, before the bank sends Notice of Default (NOD) or efter which is state even county dependant but often starts a 4 week clock till the trustee auction are the 2nd most difficult deal scenario and IMHO only experienced investors should bother, the 1st most difficult deal scenario are bidding at the court house steps on lord only knows what is being auctioned off sometimes even 2nd mortgages, you need to do so much home work to attempt to reduce your risk at the court house steps...Pre foreclosure no one talks about these issues, always about the nice sounding stuff like "motivated seller" get a good deal etc etc both are usually not the case.- 95% of folks in pre or post NOD want to stay in their house, keep their house inspite of them 100% will loose the house at the auction. 

Better to keep rent 5-10% below market, but keep a tenant long-term.If you can handle all this, you MIGHT be ready to be a real estate mogul.Otherwise, you may want to get out of your own way and hire a PMC to manage your property better.Let us know how this goes before you continue dreaming about anything else:)