My objective with the investors who invest with me is to have them make higher returns and take less risks than if they were investing on their own.

Yet - my cash flowing investments up here are doing their job - paying me monthly and paying down my principle.

With all of the interest I am paying, I would rather pay off the debt with the home sale and put that money towards the principle on a higher mortgage.I recently went to the first HELOC company and asked to increase the HELOC to $100k to pay off the CC debt and help my cashflow., they shot the idea down because they said I was going to use the money to do the same thing I did with the first HELOC.

If so that sounds even questionable.The objective is claim some justified expenses not trigger further opportunities for more audit.

As opposed to where an agent may be working on their own behalf as a principle.....I don’t know how you combine the two.  

If your mortgage includes escrows that's maybe not such a bad cash on cash return if you can get 2100 and especially if you consider the principle amortization by the tenant.

If your friend doesn’t need them, he should simply say he doesn’t need the down payment assistance because yes, he will pay more in principle, interest, taxes, deed stamps, sewer rent, filing, etc... at 200k than he would at 183k.  

The lawyer is mostly trying to say that I didn't have the right to hold any money for damage that the tenant claims was done by icicles, but I discovered the damage in July after she moved out, so not an icicle in sight, she didn't call me or take pictures, and I think it was a dent caused by a car or a heavy object and she is lying.

Don't fall into chasing the shiny object like so many do.

Treat it as objectively as possible.