Signing the lease demonstrates they agree to the terms and then you can hold them accountable.If you don't do this, then the person named on the lease and paying the rent could disappear and you would have no legal authority to charge the remaining three for unpaid rent.

This is both a legal and tax question. 

The below is not legal advice and you should hire a lawyer with past subject to experience. 

We already paid them a pretty sizeable entry fee ($30k) to cover some of their equity and debt in another project.

That's before you pay any debt service.To answer your question: No, it's generally not a good idea to lose a bunch of money every month.

The Heloc can also pose as a debt obstacle since its an open end mortgage a.k.a credit card.a mortgage is also set up over 30 years so it offers a lower rate and payment. 

Any ploy, tricks and legalities.

They obtain and manage capital, whether it’s private equity/debt, bank financing or personal capital.

Never invest in Longterm assets with short term debt.  

As long as we would be legally allowed to proceed with this plan, then the question remains, as you point out, what is the tax burden for the partial 1031 exchange.