Taxes ~$5000 principal residence/~$7000 for rental, I believe insurance ~$1200/yr.Neighborhood is good/safe for renter's, likely will not appreciate as fast as other neighborhoods b/c many duplexes in this area.

First floor must be occupied and no accessory building can be constructed before the principal residence.  

A principal residence obviously doesn't qualify as a business asset.However, there is a rev proc that establishes safe harbor for rentals acquired in a 1031 exchange that are later converted to personal use. 

remember when you play with the numbers to include Property taxes and Insurance costs, as most calculators only give you Principal and interest payments, and in Mad Town, you can plan on Taxes and insurance to run you $300/month or more depending on how expensive the house is.

In most cases second liens are reserved for owner-occupied...but you may find something on non-occupied (though the terms will not be favorable)...Not sure I can respond fully without these details, but any HELOC's I've used in the past were from a primary and used for buying investment property...my approach is to fund a checking account from the onset with funds from the HELOC...so the debt basically services itself via EFT every month....if you have good terms your payment will be interest only on principal balance...

It depends on what you want to accomplish.How much value will it increase for the repairs vs how much principal will be paid down?

However as opposed to interest only deals, you are paying down your principal balance over time. 

@Diana DorantesI’ve never ever seen a rent to own extend past 3 years What I have heard is They pay a down payment, then rent credits are added to principal... then 2-3 years later then pay the remaining SUM

If you are interested in a quick Payoff, you could just increase the monthly payment to Principal and achieve the same thing, or possibly even better. 

Assuming $1,500 rental income per month below are my monthly expenses:-Principal, Interest & PMI: $618.82-Property Tax: $289.14-Insurance: $208.33 (can probably be reduced by shopping around)-Water / Sewer / Gas: $45-Electricity: $40-Lawn Care: $70 / month (summer); $35 / month (winter)-Vacancy: 5% of $1,500= $75-Repairs: 5% of $1,500 = $75-CapEx: 7% of $1,500 = $105TOTAL EXPENSES = $1,523.29.As you can see the expenses are higher than the expected rental of $1,500.