Also, another hurdle is my employment situation has changed and I'm now self employed which has made getting approved for a loan for the time being rather difficult.

Thank you friends for your input.I spoke to one of my attorneys yesterday and he said that I don't have to return the security deposit and the tenant is also responsible for a month of lost rent.I was just trying to avoid any ugly situation and offered my tenant half of his security deposit back. 

I'd be happy to share his contact info if you're interested.Also, regarding using multiple LLC's, obviously talk to an attorney for your situation, but what has worked well for me was establishing a series LLC.

In that case you might need to find a different lender or send them the trust for review, if your trust attorney is good they should be able to provide support services for free and give the bank a call to explain the situation.

I will let the situation develop on that particular issue.

My situation is this...I have a house under contract that nets me about 25k and leaves the investor plenty of room at around 46k net after a 30k rehab. 

The HELOC terms differ from bank to bank, obviously, but I was under the impression that I would be able to secure 100% of my equity and I was wrong.Not sure what your current situation is, but have you considered house hacking as another method to finance your new purchase or pay down your current house?

When you issued the NTQ (Notice to Quit), was your intention is for the tenant to cure his situation by paying rent and continuing tenancy, or was your intention to try to force the tenant to move out.

I have a situation (that I posted on another thread) where my renter is willing to pay half, in one lump sum, if I will build a garage on the property. 

I know you're an expert in these situations.