The loan will be on the additional collateral you created.

I would say for most people, the 1st position heloc is no a good bet, especially if you have a 1st mortgage rate of less than 5%.Using this strategy with a 2nd position heloc can be just as powerful, so you can have your cake and eat it too!

I'm a big fan of value-add opportunities, whether it's buying something currently undervalued & fixing it up to my standards, or buying something that has additional income opportunities that have yet to be incorporated. 

THEY ARE NOT LIMITED TO ONE PROPERTY.So, they can 1031 to 2 or more additional properties OR 1031 into a rental property plus a DST so that all the profits are used up in the exchange. 

We plan to remove them all to protect from tax increases on our current primary, but I am afraid that now that the other properties won't have homesteads, we may see skyrocketing tax bills and it will eat into already small cash flow from rental income.Does anyone have advice for how to handle this situation other than just increasing rent?

These are professionals with additional training and a stricter code of ethics.

Quote from @Chris Seveney: Quote from @Devin James: In 2021, we saw buyers upgrading to larger homes, taking advantage of 3% interest rates to afford an extra 300+ square feet.Today, smaller homes are selling much faster as higher rates make additional square footage less affordable.While rates are historically average, I don’t see them dropping significantly.

We wanted additional units to pay mortgage and have cash flow.

Some people make 4x the rent but squander their income on eating out, drinking, car payments, etc.

In addition to being illegal, if we had not caught this, (thanks Diogo!)