As far as the HELOC, banks do these loans hoping to collect interest for a number of years to come; since the property is listed for sale, the loan duration will be brief so not as much interest will be collected - so not really desirable for the bank. 

It's vacant, homeowner probably does not have the capacity or desire to fix/rent it. and would like to wash their hands of it for the amount of the loans.  

Landis,Does that apartment building going in next to your potential property have any effect on your desire to purchase the property?

I do think the rental rate is fair but I also know the neighborhood is becoming more desirable and from the people who I met at my showings many of them were frustrated with how much rental demand there was

Don't connect the two.To figure out the lease payment you will be making, take your rental income as a starting point and subtract all the expenses you will be handling (paying), then the desired cash flow (if you don't make positive cash flow, why bother).  

your ability to get join / ask your question is great, but i have to agree with members that you need to figure out what you desire as an end goal, be honest with yourself in regards to what you are and aren't willing to do for it and while your at it, It might be wise to set down with your agent and determine if you have the right one.  

Its ALL about the numbers.I may like something but if it doesnt fit my game plan or doest calculate to my desired return I dont purchase it. 3/2 will cost more - does the income compensate for it?

Dennis, I have heard of cases where SD-IRAs were used for the purposes you desire.  

The population would have to decrease substantially for rents to go down a lot and that may happen with a major natural disaster or another huge tech bust but for now shortage of land and buildings in desirable areas combined with increasing population will hold up the market.

Real estate requires abstract thinking, an ability to organize variables and constraints to effect a desired outcome.