Hopefully they have put a stop to this so someone update me if this is no longer allowed.

They recently have updated verbiage on those.

Anything you can update on it to raise it's value closer to the mortgage?

Purchase price: $102,500 Cash invested: $28,000 Rehabbed single family ranch property by replacing all trim, flooring, removing kitchen wall for open concept, new kitchen cabinets & island, replaced roof, updated electrical, new heat pump and A/C, complete Master Bathroom(with tile shower), and adding egress window in basement.

Update: I spoke to the city and confirmed legal use of non-conformity.  

We had a vision for this home that has had no updates since the 60's.

Worse yet, since these categories constantly change, if you don't go in and update your choice every 3 months, you only get the flat 1% cashback. 

I have invested a lot of time and money updating it.

Surely your due diligence on this one will bring great equity w/all the newer updates.

However, if you can't handle the new HELOC payment combined with the new investment payment then cash is king.On another note having the HELOC is a great investment in itself because you can draw on a standard HELOC for 10 years which will allow you to put a down payment on this investment and if you pay it back you can use it again on your next investment or to even to update the investment or the primary.Best of Luck!