If he has little equity in his property and he defaults on his payments,  you likely aren't covered in equity on your lien if he goes into foreclosure.  

Additionally, I am sitting on approximately 800k in equity in my current residence.

We can already get out $60k from the rental, keep $40k in equity plus the $500/mo cash flow, and don't have to eat $15-20k in selling costs.

Maybe I didn’t read it well enough, I had 600k in equity (875-275).  

Between the sweat equity from the rehab and market appreciation I have about $50k in equity per house, with each house profiting about $6k per year.     

If I co-own my primary residence ($250k) with my sister (mortgage with bank#1; $150k in equity), can I obtain 2 separate HELOCs (@$50k each, instead of 1 HELOC@100k) if both are with bank#2?

. $200k in equity after intense rehab.

We've been finding a lot of built in equity in Southern Indiana, but it hasn't been great for flips.

You had $34K in equity at purchase and the property value increased $39K from from $105K to $144K, making the new equity value $73K.

The first mortgage will be your seller financing at $90K.The problem here is that your private lender is sitting on a house with only $22K ($120K - $98K) in equity.