The issue from my perspective is that the contract is unsecured.

Typically, a PMC issues monthly owner statements.

Is it a headache or is there any type of legal issues with this method?

At the end of the year, I share that sheet to my accountant and he does my accounting without any issue. 

drive 2-4 unit real estate up to stupid levels, relative to rents (the FHA "house hackers" with 3.5% down, even though it's spoken about a lot, haven't really moved the needle IMO b/c they are so rarely actually done).

At the end of the day, investing is not about SCALING but about maximizing the financial return on your money relative to the perceived risk.I don't know your current portfolio or asset, but as others noted, you need to really run the numbers on that sale.  

@Derek BrickleyThat's super helpful, I'm going to do some more research into the self-sufficiency tests in relation to my market.

Could you share with me what bank you found that issues HELOCs on Rental Properties?

You will pay a higher interest rate and need a bigger downpayment.What you need is good STR insurance with plenty of coverage to protect you.An LLC offers some protection with contract issues (like kicking someone out during their stay) vs negligence, which is what you need to watch for.

The issue was eventually fixed but many landlords lost thousands of dollars.