currently HELOC rate is at 3.00%, down from 3.99% a month ago when the 6 month initial lock ended (i have over 9 years left on my draw period). now the rate is variable. the bank is hinting that the rate on the mortgage will be around 3.5% fixed. i don't qualify for traditional mortgage on my dti (but i do double my income with overtime and bonuses, and my wife will have a new income as well once we relocate) so our family friend is cosigning on the mortgage with me. the bank is writing it internally at 15yr with a choice between amortized or balloon. the building will need a new roof in about 5 years, and leaving $35k in the HELOC for that would keep me happy, so i'm willing to go up to $100k down payment if it makes sense. that would change my loan to $179k from $223,200, but also would tap any funds i might have for improving the property other than the roof, like fencing in the backyard and converting the third floor to its own unit. the new rubber roof would be more like $20-$25k but i like to be conservative. i have heard of people using their heloc to pay down their mortgage principal, which i could also do, but it seems to be a gimmick, and even if not may it be easier to just get a smaller loan amount to start?

My understanding is that material participation are hours that you are actively doing for your properties (day to day and trying to improve them).

Rents are on lower side but with some improvements hope to increase.

A good tenant is someone who:Has stable employment in a market segment that is very likely to be stable or improve over timeHas a credit history with which you can evaluate the likelihood that they will performPays all the rent on scheduleTakes care of the propertyDoes not cause problems with neighborsDoes not engage in illegal activities while on the propertyStays for many yearsThe right tenant pool is so important that I would interview multiple local property managers to validate the tenant pool selection.

The intent with the new (to us) house would be to do the same thing:  live there for a while, make minor improvements/renovations, find a new house for us to live in and keep this house to rent out.So, to my question...What would you do? 

And although Im super hesitant to use this figure in my purchase decision, my realtor comp-ed them out at 750k ARV.Last Years Actual Rent Paid: 62,777 Last Years Gross Rent Billed: 109680 Pro Forma Rent: 110,000 - 140,000 based on minor improvements/cleanup and then rent increases/tenant removalPITI: 5500/month. (66000) P 1600 + I 1300 + T 2000 + I 400Expected Vacancy and unpaid: 15% (16500)Maintenance + Capital: 10% (11000)Net currently: -4000 Net Projected: 31,500Projected ConC: ~100% with 25k down and 6500 closing costs.Thank you for taking the time to look at these numbers.

I think it’s called form 1000https://guide.freddiemac.com/c...For example, if I’m purchasing a property where monthly PITI is $1,000 and monthly rental income is projected to be $1,100 does my “income” part of DTI go up by $100 and effective improve my DTI to qualify for the loan? 

Even the decrease in 10% rent can have adverse effect on cashflow.I am also open to do a cosmetic repair where I can improve some of the stuff to compete with newer homes in the area (say granite countertops and stainless steel newer appliances).

Thanks @Scott Mac it definitely improves curb appeal 

Capital Improvements - I've spent a lot this year improving units during vacancy turnovers.