I’m leaning towards HELOC as I anticipate drawing 50k chunks of money at a time but am concerned about rising interest rates and the variable nature of HELOC rates. 

They won't -- it's just human nature- What if section 8 rent is below market rent?

Don’t you have natural gas heat available Electric baseboard is really expensive and tenants know this .

(All security deposits by their very nature are refundable.) 

Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum.

I look forward to our interactions together on the BP Forums. 

The “what” will come naturally with time.

This is true for most all rentals in the Midwest which aren't in like a total ghetto or something of that nature.

Naturally you should follow the strategy best suited for you.Since we are both in San Diego, maybe we can meet, have coffe or a meal and chat about our investment approaches, and if we run out of interesting topics on that, we tell each other the war and flight stories...

@Jacob Compton I'm a little late to this post, but here is a good Forbes article about natural disasters and flooding specifically that would be helpful for the future - all of these crazy storms in the Midwest keep coming out of nowhere!