A loan that services a rental property does not have to be secured by the rental property to be a deductible business/rental expense. Basically, you could buy the rental property with a secured mortgage, an unsecured personal loan, or even credit cards, and the interest is deductible as a rental expense against rental income. This is covered in IRS publication 535, page 14. https://www.irs.gov/pub/irs-pdf/p535.pdf
The tracing rules say you must be able to trace the interest you want to deduct to the business purpose. That's ok if you take out an HELOC and use the entire amount to buy an investment property. However, if you take another draw from the HELOC for a new car, or a vacation, or an improvement on your main home, then you muddy the waters and it become much harder to trace a specific dollar of interest back to the business property.
However, there is a special caveat with respect to a loan secured by your own home. You can treat it as a secured loan for the schedule A itemized mortgage interest deduction, or as an unsecured loan for other purposes, but not both. That means that if you make the election to treat the loan as a business loan for the rental, you can't go back later and treat it as a mortgage for the schedule A mortgage interest deduction, even if you use part of the HELOC for a home improvement that would normally qualify for the mortgage interest deduction.
See https://www.law.cornell.edu/cfr/text/26/1.163-10T
(5) Election to treat debt as not secured by a qualified residence -
(i) In general. For purposes of this section, a taxpayer may elect to treat any debt that is secured by a qualified residence as not secured by the qualified residence. An election made under this paragraph shall be effective for the taxable year for which the election is made and for all subsequent taxable years unless revoked with the consent of the Commissioner.
