I am considering a HELOC on a rental property, but I was just told, "If the use of funds is to purchase another property, the loan will be declined for business use, if the purpose of funds is for reserves to fix up rental properties as needed, then we can do the loan."

I also have a 42k/year full time job, army reserves that brings in approximately $250/month, and am starting a part-time job next week that should bring in about $750/month extra as well. 

Worrying about (1) building rather than (20) scattered site sounds sexy, as long as the return is the same as the (20) - Multifamily comes with its own challenges, in my experience multi-family tenants stay shorter durations than single family homes, but this is also said with some reservation as it depends on the location of your multifamily.

I would try to get a full time job, and then side hustle in real estate (put kids to work in side hustle). 2) Save 50% of that salary, until you have 6-12 months of reserves in the bank.

Joe,I work full time as a Network Engineer, so 7a - 3p M-F is reserved for my job. 

My advice is not to do the parking right now, because I can pretty much guarantee that within the next year or two something will come up on the property that will make you wish you'd saved the $3500+ in reserve for higher priority items.Keep it on the "nice to have" list and just deal with the current parking situation until you have so much money that you feel you have some left over for improvements after all the necessary reserves have been satisfied.

With the issues you described it sounds like this may be a tough deal for a first timer unless you are getting the place at an absolute steal.Something to consider: Will the rehab costs you are walking into drain your reserve funds?

All lenders will want to verify proof of down payment, closings costs, and a variation of monthly interest reserve (3-6 months).

Focus on getting your cash reserve up !

Just make sure there aren't any CapEx looming right around the corner unless you have the reserves to deal with them.