This creates two loan payments ($100,000 of equity and $300,000 on the new mortgage).Key NumbersHome Equity Loan Interest Rate: 6%Mortgage Interest Rate: 7%Rental Income: $3,000 per monthExpenses (management, taxes, insurance, maintenance): $800 per monthIncome and ExpensesMonthly Rental Income: $3,000Monthly Expenses: $800Monthly Mortgage Payment: $2,000ExplanationThe investor earns $3,000 in rent each month.They pay $2,000 on the investment property mortgage and $800 on other expenses.This leaves $200 profit each month or $2,400 per year.However, you have to pay $6,000 interest on the equity borrowed.This leaves you with an annual loss of $3,600.While the rental property generates positive monthly income, the interest cost of borrowing the initial $100,000 results in an overall loss.

My plan is to funnel the rental incomes from all three properties, along with my W2 income, back into the HELOC while covering all expenses from it as well.

That would be a helpful addition to your plan as you would further reduce your cost of living.Also don’t forget from that $600 you are planning on getting in cash flow you have taxes, insurance, maintenance, capex, and vacancy to consider.With two homes, you may want to keep that extra $20k as an emergency fund rather than spending it on a third property and then be left with no emergency funds.

Plumbers can separate lines, but trenching and additional work can drive costs into the $5,000 –$10,000 range.

I would slow down and think about your BUDGET, what you can get for $30k, and how you can increase your income.

All this in addition to 6 other lease violations... 

Quote from @Brandon Croucier: Financing a commercial MF that runs as an STR is possible.Appraising a property based on the income is not, whos to say a buyer would STR the property. 

You still claim the income as miscellaneous income and deduct property taxes and mortgage interest (subject to SALT and other high mortgage limitations) on your Schedule A, but that's it.2. 

Quote from @Lisa Albright: Hi All,Newbie here, just a quick question we are building an addition on our second home, we have a primary residence, and two rental properties.

This could help decide if the income is enough.