All the depreciation and the capital gains go away.

Day traders are not exempt unless they elect mark-to-market (MTM) accounting, which eliminates wash sale tracking but taxes gains as ordinary income.To manage taxes, track trades closely, avoid overlapping purchases, or consider MTM election if trading actively.

Do you think this strategy gains strength if lets say... in five years interest rates are at 5.5 vs 7.5 now?  

If I have a skill, knowledge, the right contacts or or a passion that can be leveraged into potential gains, that is where my money is applied.

This benefit allows the owner’s estate or heirs to receive the property at a new, higher basis—reducing capital gains taxes if they choose to sell the property after inheriting it.In short, partial disposition allows tax deductions for retired property components during ownership, while the death step-up basis resets the property’s depreciated value, providing tax relief for heirs.

After five years you'll have earned $90,000 in rent income and gained $34,000 in appreciation.Buy four houses with $50,000 down on each.

And would this be considered "capital gains" since it's re-sold under 1-year therefore having to pay a large % of tax on the profit?

By working for a larger corporation you are gaining an unfair advantage, by letting them train and develop you (while you are getting paid) and you do real estate on the side.This idea is not from me, read RichDad. 

To Sum it up, its a good idea if you can exceed the cost of capital (higher rate than your cost of debt) with what you earn on your heloc/debt you pull out and invest.The question is how much gains above is enough to substantiate the risk of your variable interest rate, well thats up to your personal investing criteria.

This allows new investors to gain experience while minimizing risk and maximizing returns right from the start.