We finance it through a LLC we setup and got a commercial loan for the property with 20% down by borrowing from a 401k. 

Thus, bringing the borrower’s principal and interest at $1,949.63.Net Cash Flow for this may equal $808.66, with a 14.12% Cash-on-Cash Return.In this scenario, the borrower is looking for $68,746.00 to fund the Entry Fee.

It could create a more favorable borrowing environment for real estate investors.

Your parents can also be a "Non-Occupant" co-borrower to help you qualify.

Quote from @Grace H Scott: We are a private lender, located in Tampa, Florida, United States. welend money to borrowers nationwide and a few other countriesoverseas who are looking to develop their businesses.

They follow state laws, or in the case of a VA loan, the borrowers entitlement will be reduced by the amount of the loss against the loan.

HELOC wouldn't be bad but if you are doing another house hack I would use the cash you have and not borrow for the DP.

Cashing out the equity on your current property is just another means of borrowing.

In some states the 2nd may be uncollectible as it’s past statute of limitationsRegarding charge off, that has little impact on borrower - the lender is writing it off I.

HELOC bank doesn't want their line used as a term loan on real estate they don't have collateralized and the bank that you apply for a loan for doesn't want your down payment to be borrowed.If you wanted to get the HELOC for home improvements then decide to draw on it for liquidity, had it sit in a bank account for a couple months and then applied for a MF loan and used it as the down payment, you'd have to answer no to the question, "is any part of the down payment borrowed".