Therefore, you don't need to use a 1031 exchange; you can take as long as you wish to find and then buy another property.The only exception is if there is debt on a property, in which case there will be some UBIT (Unrelated Business Income Tax) implications.

Rental Income vs.

I am not opposed to making this my primary method of income either.

You need sufficient NET (after all expenses) self-employment income from something like contract (1099) work, being a Realtor, wholesaling and so on.

All that said, depending on the size of your RMDs, liquidity needs, and total income, you may consider making deductible contributions to your own IRA ($7k limit, $8k if above 50).

During this time you are not generating any return from the money invested in the ADU.

By definition the first couple of deals in any portfolio that are fortunate enough to exit early will generate huge IRR.

. - how do you estimate the income on mid-term rentals?

They will do what they have to, to get their rent paid.As long as someone has a good, solid, verifiable income, I wouldn't hesitate renting to them. 

Use the HELOC on cash-generating opportunities like flips, then use the cash generated to buy long-term buy and hold investments.