@J Newman to answer your HELOC question: yes, you can use those funds for business purposes if Dad is comfortable with that option.

I could pretty comfortably afford my monthly out of pocket payment due to income and help from my partner. 

Sometimes people who are comfortable managing the details of a job will hire a less skilled person to do it knowing they can get a MUCH better price and a "decent" job IF they themselves stay on top of how the work is being done.

Being based in the Raleigh area and having lived in Chicago I am biased toward Raleigh area for investing. 

Since you're living in it, the worst case scenario is paying the full mortgage which hopefully you would be able to do anyway. 

I'm asking because we live in southern KY around the Lexington area and we are planning to invest and househack here where we live so we can work AND invest.

However, you can use a cost segregation study to break the property into different class lives and claim more depreciation up front.

I would go with your gut on which home you would rather live in.

I live 100% from the income from our holdings. 

I originally lived in the casita while I rented the front home out.