That arrangement seemed odd to me and I'm suprised others here do the same.

It can probably be arranged at escrow to pay off the HELOC directly with the funds coming from the refinance.This depends on whether you ran your numbers correctly and you have enough to pay off the HELOC from the refinance. 

(e) “Service” means and includes, but is not limited to, any of the following:(1) Debt, budget, or financial counseling of any type.(2) Receiving money for the purpose of distributing it to creditors in payment or partial payment of any obligation secured by a lien on a residence in foreclosure.(3) Contacting creditors on behalf of an owner of a residence in foreclosure.(4) Arranging or attempting to arrange for an extension of the period within which the owner of a residence in foreclosure may cure his or her default and reinstate his or her obligation pursuant to Section 2924c.(5) Arranging or attempting to arrange for any delay or postponement of the time of sale of the residence in foreclosure.(6) Advising the filing of any document or assisting in any manner in the preparation of any document for filing with any bankruptcy court.(7) Giving any advice, explanation, or instruction to an owner of a residence in foreclosure which in any manner relates to the cure of a default in or the reinstatement of an obligation secured by a lien on the residence in foreclosure, the full satisfaction of that obligation, or the postponement or avoidance of a sale of a residence in foreclosure pursuant to a power of sale contained in any deed of trust.(8) Arranging or attempting to arrange for the payment by the beneficiary, mortgagee, trustee under a power of sale, or counsel for the beneficiary, mortgagee, or trustee, of the remaining proceeds to which the owner is entitled from a foreclosure sale of the owner’s residence in foreclosure.

As of mid-summer, they were saying that 13 of the planned 80 houses were spoken for, with deposits down and financing arranged.

Also, you could set your checkout times to 10 AM - 4PM, keep the length of time their allowed to book short (1-3 days), and arrange showings between the checkout times. 

Another method is to simply bring the deal to another investor and work out some type of arrangement between you two.

If you aren't able to accomplish this on your own and would prefer a single point of contact, that's where loan brokers come in.When we arrange commercial loans for our clients, we don't tell them they "have" the loan until the commitment letter is issued, and we set expectations and have contingency plans in the case where a loan falls through.

You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense.

Again, realtors and lenders are free for you as the buyer, and they'll handle all the closing arrangements (title work, etc.).

To echo the thoughts here, no you can’t just set up random rental arrangements to get around the property tax limitations.