They get a higher return since they are covering housing cost, have the $250k per spouse primary residence deduction in gains, is a savings account, higher leverage position, lower interest rate possible, will pay more premium for location, etc.House might be overpriced for REITs but not for home owners.  

A HELOC offers flexibility and lower interest rates, which can be ideal if you’re looking for short-term financing with lower payments during construction.

Finally from a purely from a cash outlay prospective short term, you could rent a house with roommates and your payment would still probably be Lower than house hacking because rates are so high, over the long period 5-10 years obviously it would cheaper ti buy, hope that makes sense 

Strategy 1: buy a duplex, live in one unit (for one year as a "primary residence) and rent out another unit as a short-term / mid-term rental on Airbnb.

I have rented out this home short term before and have been successful but I don't have any experience with 12 month leases.  

Some investors also use a business line of credit backed by their cash flow, which can help with future deals.If you’re planning to scale, maybe start stacking that cash for the next property or even park some in T-bills for short-term returns.

I’m actually also an investor in long term property rentals in Ohio so I’ve seen success in short term and long term rentals.

Mistakes I see people make is they plan on living there a short time and over renovate the property where they will never get the money they put into it back. 

I would assume that if its for a short term loan, it would likely be better terms with the HELOC but I dont know much about the subject honestly. 

However, the IRS may scrutinize exchanges if the holding period post-transfer is too short (typically 12-24 months recommended).If one partner wants to defer capital gains while the other prefers cash, the deferring partner could reinvest their share into a Qualified Opportunity Zone (QOZ) fund, which can defer and reduce taxable gains if held for at least 10 years.