I'm considering developing properties and using pre fab home kits to reduce build time and keep the money moving. 

In the latter scenario, you don't cash out the investment property to repay the primary cash out; rather, you cash out the investment property to buy another investment property.One more thing to keep in mind - when a heloc and the market turns, the bank can reduce the balance of the line, reducing your purchasing power.

If you come in under budget, most likely the bank will just reduce your loan balance, potentially when you refi the construction loan you could get cash out, but I would not bank on this.

Since it is a long-distance investment, we do want to keep certain cash flow to reduce the risk.

You've reduced your cost of living you're also putting your money towards paying down the principal which is increasing your net worth.

These efforts can not only attract green-minded tenants, but they can also help reduce your operating costs and increase the value of your rental properties.

Now, this may very well reduce $50,000 home runs to five $10k base hits but, like Michael said, operate with integrity and honor, lead in a spirit of service and reciprocity, and the rest will follow.

For example if you are currently paying $2000/month in rent, but you can find the right property that reduces your monthly living expense to $1000/month thanks to tenants and your house is appreciating at CA rates then you may still be ahead.

I decided to reduce my 401k to the minimum (to receive the company match, but nothing more) and invest in real estate. 

This could significantly reduce buyers which could reduce the value.