In my opinion, keeping the home and getting that HELOC out would allow you to have a future asset which an increasing rental market (more potential cash flow), give you funds to proceed on your next deal and invest, and the diversification in your portfolio to shield you from some market risks. 

But that is a risk you must feel comfortable taking!

I avoid these small wholesale deals (especially after the one I mentioned above) because the taxes could make it not worth the while.Apologies if this is a newbie question, Im used to making more profit and expecting up to 1 year of property taxes max, getting a discount at the beginning, then playing catchup at the end, ultimately paying p. taxes for the time I hold and carry the property.

Do not expect the home in this price range and rent carry positive cash flow anywhere in the US.

The local lenders I’ve talked to all seemed prefer balloons as to reduce their risk.  

Every person's risk tolerance, experience, knowledge and financial situation is different. 

Find a way to reduce your bills and minimize your risk and increase rents to turn it into a winner.

I have been at risk of someone injuring themselves and suing.  

What are the risks?

Doing this long distance really increases your risk.