Your equity can provide the funds to make those improvements happen, increasing your home’s value and making it more enjoyable to live in too.Getting a Business GoingIf you’ve been dreaming about starting your own business, your equity could be the kickstart you need.

From what I can tell, the extra equity on the house could be utilized to provide better ROI.  

The $1,500 net cash flow you mentioned represents a tightened rental return that could provide consistent passive income.

If/when you do move, renting your vacated unit will provide even more cashflow.

Multi-family properties many times provide a better return per square foot than single family, which would be to your advantage as well.As long as you're mindful of the reinvestment requirements and purchase at least as much as you sold and use all of the proceeds, you shouldn't have any issues with this strategy.

@Brian Chadwick A cash out refinance might offer more favorable interest rates than your HELOC provides.

Lease Terms: Determine a monthly rent payment that covers the HELOC repayment (interest and principal) while providing some positive cash flow for you.                    

Some level of protection will almost certainly be provided as opposed to some sort of outright ban.  

The only other options I can see are A) your mom partnering with you rather then selling the property to you - you become 50% owner and bring the funds and management to the rental while she provides the existing equity as her contribution; or B) your mom lending you the rehab cash out of her personal funds while also seller financing the house to you. 

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