I've put the remaining $17k in savings and plan to use it as a down payment for a second house.  

I don't even have a down payment!

Also, is it possible to use HELOCs toward down payments and still take out a mortgage on future properties?

So now I'm calling all the QuickenLoans and Loan Depot's of country and no one will touch it because: A) Its not my primary residence B) I haven't owned it for a year C) The private lender isn't reporting the monthly payments to a credit bureau so I don't have a verifiable proof of payment D) Been doing AirBnB, so no lease (if I wanted to get 2nd home or rental property financing)Solutions I'm aware of: 1) Most loan officers have suggested I call a local credit union, which I have done> The credit unions are concerned because it's not my primary and I don't have  lease in place with proof of payments via bank statements.

So our payment is $810 a month.

He’s getting 10% interest and gross income/mortgage payment ratio is very high + he’s getting cash flow sweeps every year so that the total loan amount is repaid in 3-4 years.

He said you can get a $10,000 down payment this way and if they miss a payment on time or violate the contract in any way by not paying, you can kick them out and keep the $10,000 they paid for down payment and do it again with the next person.

.), but I'd likely have to get a partner for the down payment, or just wholesale it to someone.)  

His payments are very minimal (less than $150/mo).

I would try to find sellers who are open to owner financing or pre foreclosures with some equity where you could take over their payments subject to the existing mortgage.