So the question is I have been prequalified and can do $$ % down payment and <21 days closing. 

You are saving up your down payment anyway, I would wait until a good 4 unit comes along. if you’re only putting down 3.5%, the difference between the down payment for a 4 unit and a duplex/triplex is not gonna be that big. 

This may result in, say, medical debt payments taking the value of the house rather than an heir getting the house. 

I have used a portion of it to buy another rental property and am contemplating using the rest as a down payment for a primary residence. 

Ie. 6 months worth of payments

You borrow the $20k downpayment plus $5k in closing costs and $5k in rehab costs from your HELOC also at 6% (note $5k in rehab costs in nothing so the house better be newer and in great shape).Let's say you rent the property out for $1000/month and using the 50% rule you have $500 in expenses each month.Your mortgage payment will be $480/month.

I've been communicating with the tenant over the past few months to try and get them to set-up a payment plan and have had two letters sent from my lawyer outlining what is owed.  

We’ll have a better sense about the repairs after inspection.  1) should I use the annuity as a down payment and take the tax hit or withhold taxes until the spring and potentially pay back the annuity using equity from a refinance?  

Then, somehow she decided to take the entire payment at once without consulting me.

And since the loans are 30 year loans, the payments are lower which help you qualify for future loans.