Would a better option be to use the HELOC to purchase the short term rental in full with no mortgage?

We were planning $600/mo mortgage payment, $100/mo insurance & $100/mo taxes - balloon payment in 5 yrs.We are providing $5k to pay back taxes ($4k), back hoa ($125), pump septic & grease trap clean out ($225), survey ($600)  & our children are paying closing costs ($1500).Deal stalled as owner backed out on seller finance.Suggestions?

This nonsense about paying full price off the MLS and using borrowed money to cover the closing costs is very alarming.You haven't said that, but a popular guru has and he has sold a lot of "memberships" in the process.

Lesson learned that location is always no.1 factor and quality of renovation is the momentum of it and those two the most profitable combination.

You can use an LLC, no tax returns, DTI, or employment checks are required.

We are negotiating the price with no brokers, which I love.   

The seller will not let us extend due diligence and will just put it back on the market and said he could do these repairs for half of the cost of the low bid (~5k).

You can take courses offered by the CCIM Institute even if aren't a real estate broker and have no interest in the CCIM designation.

It might be more expensive than usual because your property insurance has no personal liability coverage, but it's a good route if it's available to you.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!