Questions on 1031 Exchange

[Jason Seward]

I am looking to buy a Vacation rental cottage in OBX N.C. which I plan to move into as my primary when I retire several years from now. I have been approved by a lender and have begun my search for homes. I had an idea pop in my head yesterday that I am not sure would work or not, but wanted to get your guys opinions/expertise. I currently have 2 single family flip projects under rehab and both are on the same track to be completed in about a month. Normally, id flip, pay the taxes on the gains and move on, but with the timing I have thought of a possible 1031 exchange into an OBX home. Here is what I'm thinking:

- Both flip houses would sell for a combined $340,000 with roughly $80K of that being gains. After realtor commission it would be roughly $320K to exchange into new property. 

- The OBX home would be roughly $400K(I'll use that for easy math). I would exchange $320K and use $80K from my HELOC to purchase.

- Then I would cash out refi the OBX home at 80% LTV, receiving $320,000 from the cash out tax free.

What am I missing in the above scenario? Is how I described it possible and within the 1031 guidelines? This seems to make sense to me as it is away to still flip the 2 properties, avoid the taxes on the gains by exchanging them into the new property and then cash that property out with a new mortgage which essentially gets the gains back to me tax free. I've never done a 1031, so I'm not sure if any of this is possible, but would love any advice you guys can offer up. Thanks