However they do choose to live in CA for many of the positives listed by folks previously.

Pretty much any regular bank / lender is going to require themselves to be in first position on all the properties... so I don't think a HELOC type solution is going to work across multiple properties with multiple lenders.  

Most mentors are more oriented toward the positive mental attitude of slugging through finding a property, which can be trying to a lot of people.

That’s absolutely great and wonderful for the investors who are in the position to stabilize that!!!

While it's positive after expenses and has potential for improvement in year two, it’s been a bigger hassle than anticipated and taking attention from other priorities and areas of our life with not enough return. 

I was in a similar position a few years ago, but fortunately got married and our combined incomes helped us qualify for a larger house hack.We're on our second one in NOVA, Alexandria to be exact, and instead of rent by the room, we are renting out our walkout basement on Airbnb to monthly guests.That said, we have a number of friends doing well with rent by the room across NOVA, though they're purchasing homes with 5+ rooms or finding homes that can be renovated to include that setup.I'd recommend attending meetups such as the one I cohost, NOVA REI or Cashflow Breakfast Club or any of the others to meet those who are house hacking.

My other positive is the money that is generated from taking out the loan can be used now vs. locked away until you are 59 1/2 years. 

Do not ask for their copy of the lease; act from a position of strength and give her the two options.

Its a month to month and im in a weak position even to ask the tenant to renew lease now and they seem they are willing to stay they just need a solution to the issue.

I recently helped a friend who was in a similar position - looking to tap into equity for a rental property purchase in Phoenix.