Because I will gain about 30K in equity on closing, and appreciation in that neighborhood, if it keeps up, will give me 60% returns on my money invested alone, not counting principal pay down and cash flow, which are roughly 11% after expenses.

Mortgage interest on your primary residence is not deductible, the trade-off is there is no capital gains due on the sale of your primary residence.There are many more subtle differences, but this gives you a starting picture.

I'm now at a point where I feel I'm ready to jump right in an gain some real life experience.  

No need to trade out of one unit that is gaining equity and riding appreciation only to buy an overpriced asset in it's place.If you are ever in the Portland area let me know.

Best words of advice I can give about any subject...Learn ferociously for a short period of time (always with the intent of applying the knowledge), take a few of the concepts you learn into the real world on a small scale to actually feel it and gain confidence, make a plan with short and long term goals and then attack it.

His CPA suggested that he put the duplex in a LLC and sell me half of the LLC, so that he can get the 250,000 capital gain exemption since he has lived in one of the units 2 out of the last 5 years.

However, there are plenty of ways to make money buying such cheap property...it depends on who you ask but starting out I suggest going for an easier location to deal with and after  gaining some experience then toy with a more "challenging" area.

Please check out the links below to maybe gain some insight.A couple blogs on HELOCshttp://www.biggerpockets.com/renewsblog/2013/08/27...http://www.biggerpockets.com/renewsblog/2014/02/01...a couple forums on HELOCshttp://www.biggerpockets.com/forums/49/topics/212951-helochttp://www.biggerpockets.com/forums/48/topics/183065-helochttp://www.biggerpockets.com/forums/88/topics/144032-heloc

I can't cash out until May of 2016 to defer capital gains.

We really enjoy being landlords and have a goal of starting our own property management company in a few years, but first I plan to get my real estate broker license in order to gain some experience in the industry.