Write out some of your favorite places to eat (bites), your favorite things to see or do (sights) and any other tips you have about the area (insights).

I could likely get an 90%+ LTV HELOC to finance the updates, but If I chose to finance them and rent I'm concerned about the interest eating into my monthly cashflow from rental income, and how this impacts my outlook for acquiring a second property. 

Never put all the eggs in a basket and hope it works out.I'd figure out the tax consequences of selling 50-65% of your stocks and find a realistic budget (PP + rehab) for a duplex.

The HELOC does not do much for eating at the cash flow and the area is appreciating.

I don't think the lawyer has a leg to stand on but I'd hate to get into a drawn out battle and just eat up time. 

Perhaps, his 5 homes in Las Vegas could appreciate more than the 6-unit in California, but the management company and long-distance problems eat up a huge portion of any profits.I am not saying property management companies are bad.

If so it eats into the cash flow 

Evictions are very costly and you can't afford many before they eat up all your profit.

Eat your tax penalty now vs kicking the can down the road to a time when taxes are sure to go up. 

Raleigh is an expensive market, comparatively to other parts of NC and most people done have $300k sitting in cash to purchase outright, and even if you did why put all your eggs in one basket?