So, when you combine the $1 of equity = $5 in property value at the purchase, with the $1 of equity = $1 of appreciation (increase in PV), that increase is actually diluting the value of the equity.Example:1 - Buy property PV = purchase price = $100kDP = initial equity = 20%/$20k2 - Property appreciates 20%PV = $120kEquity = 33%/$40k3a - Keep  propertyEquity = 33%/$40kPV = $120k3b - Sell  property, and reinvestEquity = 20%/$40k (wait,...equity gained from paydown of principle pays closing costs)PV = $200kProperty appreciates 20% for both properties...4a - Still keeping propertyPV (increase $24k) = $144kEquity (increase same $24k) = $64k4b1 - Impact on sold scenarioPV (increase $40k) = $240kEquity (increase same $40k) = $80k4b2 - Sell PV (5 x equity again) = $400kEquity (same as if we didn't sell it) = $80kThis is an exponential return...the most powerful application of algebra that can be applied to REI.These numbers, and the distance between them, grow even wider when you are in a State like California where the equity growth from appreciation is much higher than the example shown here. 

If you were to decide to accelerate for some time, i.e paying your positive cash flow as extra principle for some years, you still can’t get to that money or any appreciation in your house unless you refinance.With a HELOC, you have that flexibility all the time.Calling it a scam is inappropriate.

I called over 50 lenders in Florida and found 2 that actually offered HELOCs on investment:Spacecoast CU and USF CUNot precise but Spacecoast had 2 programs - total closing costs around $350  w/ desktop appraisal (add in $450 if appraisal needed):1) 7 year draw I.O. with 14 yr repay- 70-75% LTV, 1 yr rate lock 3.74 top tier credit then to prime2) 7 year draw with 1.5% of principle payment, 14 year repay- 80% LTV 3.74 top tier credit then to prime.USF - ~$800 in closing costs not including Appraisal1) 7 year draw I.O. with 14 repay. - 70% LTV Prime +1 for top tier credit.I'm going through my second one with Spacecoast, the USF terms are from a few months ago so could have changed slightly.

However, if one is trying to build an exit from the world in which they currently make $350k and wants to build a new path in which they can earn the $350k from Real Estate and continue to grow that business, does the same principle apply?

Principles of Real Estate Syndication by Samuel K Freshman is a good one

So my first goal is to be able spend more time with my kids and my wife, by following the Kiyosaki principles of his Cashflow Quadrant without sacrificing our standard of living.

With a preferred return you are not sharing in equity gained through appreciation and principle pay down. 

Barack Obama, a prime example of "The Peter's Principle"

Well at the end of the year your principle, the $100,000, is worth 4% less than it was at the start of the year.

I think the rule is 6 months worth of Principle and Interest payments in the bank - so if your payment is $500 a month, $3000 would be enough.