This is really a lot of information packed into a densely worded post.Yes, you can use loan proceeds to buy out another member, but it doesn't seem like you'll have enough to buy out and develop.

I've seen small multi-families (2-4 units) appreciate very nicely in the Lewiston/Auburn area.

And lets say you then rehab it only to find out there is bad title and you make a title claim.. if there is no loan on it your only going to get 50k from title insurance and you will lose the 50k you paid for the assignment and any money you put into rehab. 

And if it were set up where everything went through a title company so the buyer pays the title company, they manage the buyer's loan (from me), and the title company ensures my mortgage is paid without my direct involvement... what parts of the transaction would feel risky or not worth the headache to you? 

Take 100’s of pictures even if small stuff.  

Been looking at hard money loans, and also looking at doing a 401K loan from my w-2 job. 

We are always look to help investors and potentially partner on some flips.Wow small world.

What is your cash flow in dollars on this one?  

There is a multitude reasons why I like small multi-family properties over SFH.  

Talk to a trusted lender (preferably local) about what loan options are available to you.You can absolutely find some solid SFRs or even multi families around, but the cash flow on many will be lower the first few years, unless you are willing to do some value add work or buy in distressed areas with less expectation for future appreciation or price stability.If the goal is to have value down the road to cash in for a pivot, don't forsake appreciation for maximum cash flow.