Since your initial investment is technically debt (HELOC), it would be nice to have some balance of that paid off, rather than accruing interest.

Even if it's not technically illegal, I imagine it could cause frustration on both your and your tenant's end and higher turnover.

On the other hand, I seem to remember something in the ethics materials about licensed agents having a technical/information advantage over the everyday consumer.Does anyone have experience or advice with this?

Now the spread in these rates is not huge, but it is technically a higher rate.Also, depending on where your capital is coming from, you may not be able to utilize any or all of the bonus depreciation anyways.  

To Ray's point, if things went sideways we could technically afford to cover the consequences.

Yes, and I've heard the rules keep changing from time to time @John Hauser, so you almost have to a be a full time Property Manager to stay on top of the rules if you want to go the security deposit route... or you can get nailed on a technicality and owe 3x the deposit.

They're also short staffed. 

Although technically that is trespassing without permission.

I'm looking to get another deal moving and have been thinking about finding a home to flip and my parents have offered to provide funds for a downpayment and rehab potentially using their HELOC (technically the line of credit is on a piece of land).

Hi Kam,To provide a quick example of what @George Cox is saying, let's say that you have a rehab budget of 45k.Within this 45k rehab budget, you perform three equal construction draws of 15k each.When working with most hard money lenders, you would be responsible for floating this initial 15k.The way the math works out is...You put out 15k and are then reimbursed the 15k by the hard money lender.You then put out the next 15k and are reimbursed.You then put out the last 15k and are reimbursed.As you can see, the hard money lender is technically financing 100% of the rehab, but you don't get the effect of that until the rehab is complete.Hope this helps,Michael