This could be an opportunity or a huge blunder because when a note holder has issues, the borrower will generally have issues as well.

., when you get 14 years on a water heater you are on borrowed time. 

There is very little you can take in Texas.Plus the LLC wont be able to borrow money etc. 

The benefit I'm seeing with having a HELOC in lieu of a conventional mortgage is the fact I only pay interest on the principle borrowed.  

It's worth noting that you should definitely not overlook how much of a hassle the refinancing out can be but the HML is less likely to look at you as a borrower vs the property as an asset.That said, how far are you from graduating?

Ask the lender to tell you about the buyer's strengths (credit score, job history, debt-to-income ratio, etc.) and also ask if the file has been all the way through underwriting, as sometimes there are potential issues that can be brought up by the underwriter way down the line that can challenge the borrower to get the loan.As far as someone beating you up over inspection reports, that's always a tough one.

Let's assume that credit and liquid assets are not an issue and that you qualify for 70% LTV - This means that you can borrow up to $105K.

Straight from the Fannie Mae Selling Guide - Verifying Capital Gains IncomeDocument a two-year history of capital gains income by obtaining copies of the borrower’s signed federal income tax returns for the most recent two years, including IRS Form 1040, Schedule D.Develop an average income from the last two years (according to the Variable Income section of B3-3.1-01, General Income Information), and use the averaged amount as part of the borrower’s qualifying income as long as the borrower provides current evidence that he or she owns additional property or assets that can be sold if extra income is needed to make future mortgage loan payments.Note: Capital losses identified on IRS Form 1040, Schedule D, do not have to be considered when calculating income or liabilities, even if the losses are recurring.Due to the nature of this income, current receipt of the income is not required to comply with the Allowable Age of Credit Documents policy.

I am thinking of borrowing against my investment account to purchase a rental outright. 

I am currently having my finances analyzed to see how much I can borrow on my first deal.