Don't be so quick to indebt your paid off townhome until your learn creative financing and review all your options.

If you are hoping that this property will stand on its own with you living in it and not having to put your active income into it, then it might not be the best option for you right now. 

Seems like you're in a good spot with lots of options.

Consider all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.5.

@Jerry Chilimidos,Here is a list of lenders who specialize in lending to IRAs and 401Ks:https://www.biggerpockets.com/member-blogs/2810/50272-list-o...I don't know where your rentals are located and how they are performing but selling might be an option vs doing cash-out refi.I would certainly consider option C.

**Cash-Out Refinance/HELOC:** Another option to avoid paying capital gains taxes is to not sell the house at all.

Consider all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.5.

Would a home equity loan be a viable option in this situation, especially in regards to eliminating some of the red tape I'm running into with a refinancing an scorp-owned property?

So all of the gain and depreciation recapture are initially still tax deferred.However, like Joe said, the down side is later when sold  you lose the 1031 option. the client will pay tax on all gain and depreciation recaptured from before the 1031 also. 

My vote is option one.