I have funded 7 deals for this Partner like I said since Feb he will make about 200k that he could no way have made without a TRUE capital partner.. a traditional HML simply cannot do what we do..

Given that you have already set up essential automations (Hospitable, Pricelabs, Schlage, etc.) and built solid relationships with local services (cleaning company), you might not need a traditional full-service manager.

Whereas, if you were to default on a HELOC against your primary, you immediately go into foreclosure and have a bigger concern than getting sued?

Sell your current primary and buy a new one. 

And do you currently own your primary residence?

Refinance current primary home.

I converted my primary residence into a rental property three years ago.

After operating the STR for the first year can we turn the STR into our primary residence for 2 years then sell and avoid capital gains tax and depreciation recapture instead of doing a 1031 exchange?

I'm not the person to answer your primary question on the quality of investment opportunity - but I'm sure other will chime in.  

Your primary insurance policy with $300,000 in liability coverage should be sufficient in 99.999% of all lawsuits.5.