In a default on the non-refundable portion deposit, the money goes to the seller.

They range quite a bit from being very similar to a mortgage all the way to a JV where the owner occupant pays market rents on the portion they do not own.

Why pull the credit report since the Section 8 tenant pays only a small portion of the rent? 

Your father in law shouldn't have to pay for it unless the listing agent refuses to give up a portion of the commissions.

Thereby while not technically living in the property, allow you to collect the rent portion of the house hack. 

#'s on the IRS Sched E  (rounding for easier math)  (He does not have mortgages on every property - just the 2 shopping centers)------------------------------------------------------------------------Prop 1 - Shopping Center 55,000 SF$110500                  Rents (states if full should be appx $264000)$36700                    Earnings after op expenses  before Dep & Mortgage Interest ------------------------------------------------------------------------Prop 2 - Office Building - 12,000 SF   (I believe he occupies about 1/3 of it but will move out -- he does not pay rent on this portion of course, uses it as a writeoff)$22200                    Rents (says if you lease space he uses income would be higher)$8075                      Earnings after op expenses before dep &  mortgage interest-------------------------------------------------------------------------Prop 3 - Restaurant & Offices   (wasn't given sq footage)$11400                    Rents  (says it should be appx $18k)$2000                      Earnings after op expenses before dep & mortgage interest -------------------------------------------------------------------------Prop 4 - Shopping Center I believe...unk sq footage - didnt get a lot of details on this one$72000                    Rents - unk if it should be higher$24400                    Earnings after op expenses before dep & mortgage interest--------------------------------------------------------------------------Prop 5 - Restaurant - unk sq footage - got the impression this bldg was near the end of it's life - said best thing is at some point, scrape and rebuild - this may be a national restaurant and for the most part a NNN lease - made the comment every couple of years they tell him what they will renew the lease for.  

I assume the HELOC would be cheaper since you already have it and you only need to pay interest on the portion you are using.  

Texas may be one of the states that requires you to be a licensed Property manager thus limiting your business entity options further.I recommend S-Corps if you plan on selling portions of the business.LLCs seem to be straight forward for property ownership.Sole proprietorship are the easiest as they don't require much set up. 

One guy seems to have left some things out.In order to compare apples to apples, which portion of their estimates should I look at?

In a couple of years take it out of production, sell your current primary tax free and move in converting it to 121 property and a large portion of the gain from tax deferred to tax free.