So essentially, if I needed let's say $20k (for a down payment/to purchase a property) from my Roth IRA, I'd have to sell off the investment first and then withdraw those funds (the principal amount, not the gains over the years) once sold from my account.

Continual learning is essential as well as your property location.Good luck to you!

But you can do a "Cash out refinance", which yes is essentially the same thing but they don't use the term HELOC for investment props.

It is essentially a Guaranteed Payment for services rendered by a member/partner and so it is subject to self employment tax.If it's meant to be a preferred distribution because you've got two classes of owners, then no - it should be a distribution.Check your operating agreement to get a firm understanding of this.

Figure out the rents and essentially move backwards.

It does not list all the things you cannot do within the zone. and when zoning says you can or cannot do something within a particular zone, that is essentially the law.Your property is not zoned for short-term rentals, therefore you can't convert it to one.

Jacob, I have been a passive investor (Limited Partner) in several of these structures, where I get a preferred cash return (quarterly); a % of the equity/upside upon sale, with a minimum IRR% as a "safety net" before the GP gets his promote on my capital. 

Essential he would be forfeiting his deposit.

Essentially as soon as it is rented and performing (after your rehab and is rented out) then you are able to start the refinance process. 

My overall goal is building equity and the idea of a new build-- despite lower reward-- interests me for it's safety (e.g. foundation warranty for 10yrs).