The Service is very clear that once a 1031 is begun the proceeds must remain in the hands of the QI until the end of the exchange period.  

See the following:Previous Structure-GC bids job-I pay 30% at beginning, 30% halfway, 30% before final walk through, and the remaining 10% after punch out is to my satisfaction.

I have about $30,000 in equity and The property has a remaining 7 month lease with the tenants.My question:Do I take out an equity loan against the home to purchase an investment property or do I wait until the lease is up and sell the property??

Every year you're paying $X in principal payments, you are building $X in equity assuming the value remains the same.

Main reason of crash last time was  Zero down mortgages... current market has more than 50% cash buyers and remaining are 20-25% down. they will hold on to their property.... not letting go bankrupt.Specially Hedge fund and foreign investor buying all in cash... they have deep pocket to hold on to these properties... same way it happen in Canada, Australia and India... after huge appreciation, price stay flat... no burst...

According the HUD website the loan can be used in the following ways:Eligible Activities:The extent of the rehabilitation covered by Section 203(k) insurance may range from relatively minor (though exceeding $5000 in cost) to virtual reconstruction: a home that has been demolished or will be razed as part of rehabilitation is eligible, for example, provided that the existing foundation system remains in place.

It is the only entity structure whose rules allow the business owner to take a “reasonable salary” (subject to social security and medicare) and then take the remaining profit (often as much as 50% of the remaining income) out as distributions not subject to self-employment taxes.

The lien will remain unsecured but the debt did not discharge because the plan was not fulfilled.  

Not that it would necessarily save me money, but it would be nice to have two of the most trust worthy people I know on the front lines with me and in the area where my properties will be since I'll remain living in California.

You should make a new lease with tenant (for the remaining period of lease) at the time of purchasing.