If you have extra cash at the end of the month, then do double up payments on the mortgages so the principle is reduced and this will increase your heloc room.

All else being equal, lower mortgage rates reduce the cost of ownership and, thereby, allow more people to afford to buy.

@Stanley Nguyen Interest income from private lending is taxed as ordinary income, which can significantly reduce your effective return.

Increase your earnings, reduce expenses, save up, and invest.

So while moving back into it for 2 years does bring the 121 exclusion back into play, that exclusion is reduced based on the percentage of Non Qualified usage over the holding period.  

Diversifying your portfolio could reduce risk and improve overall returns.Higher Cash Flow Potential: If you redeploy the equity into markets with higher cash-on-cash returns, you could significantly increase your monthly cash flow.

Is her goal to be nice and provide some of the gains or reduce her taxes by trying to split income between her and her ex?

Investing in multifamily properties offers steady cash flow, diversification, as multiple tenants reduce vacancy risks and provide consistent income.

Without the high leverage you reduce the top source of return in CA RE which is achieve via the appreciation on a high leverage property.  

A lot of what you're paying for is free / reduced with Baselane.