Eric.If they are 5 legal units then it is a commercial property and can be appraised based on the income it produces. 

With income producing properties your debt can be offset by rental income (you will need to provide the rental roll).Max number of loans is 10 (hopefully 25 in the near future).

@Julie NearingHi Julie  for the most part it all comes down to which method (operating as a triplex or as a fourplex) is producing more rents/income.

The in-laws make around $70k combined and have around $50,000-$100,000 in savings.As an alternative strategy, what if the home equity loan is used to finance a new house for the in-laws, as well as a handful of multifamilies in a place like Bakersfield, that produce more cash-flow than we would get from a triplex in LA?

These costs tend to reduce your annual cash flow, so I would venture to say that your first years of ownership will most likely produce your best cashflows.  

Renting will yield a smaller cash flow but flipping might produce a larger profit, quicker.

A house owned for cash may under produce but it will almost never non-produce.But in order to completely avoid taxes on the boot in your 1031 why not purchase a second property as part of the 1031 using leverage. 

Another strategy my husband and I employ is putting all income producing debt (mortgage) in his name and all other debt in mine. 

Many are probably part-time and produce little to nothing.

My advice is to team up with a top producer or at least someone who is doing better than you and ask to shadow them for a week or ask if they will mentor you.