My attempt will be to BRRRR and recycle as much capital as possible. 

Personally I like leverage, it has allowed me to recycle my money and scale quickly.

I grow my own vegetables, I recycle rainwater, my house I got solar all my light fixtures are on timers and use LED.

That said, I prefer to use a HELOC for short term investments like fix & flips because I only pay for what I use and I can continually keep recycling the money.

Living in one unit while renovating the other lets you build equity and generate rental income, plus the BRRRR strategy could help you recycle your capital for future deals. 

To me it clearly seems their distributions are just recycling investor dollars or am I wrong?

You are becoming distracted and diverting your time, energy and resources away from where it should be spent which is locating and acquiring good real estate and then managing it well. 

but the reason to do them is to build equity and recycle capital.

I get a LOT of these “we want to buy your property” mailers (immediately get thrown in the recycle file), “I have a buyer who is looking in your area let me sell your house” letters, physically approached by agents and people and I get  “we’re a family and we want to  buy your property “ pitch.

If you want to be exact, my CoC is 9.8% after everything was finalized. my plan is to do a cash out refi in the near future to increase my CoC and recycle my funds to put into another property.