I’ve done some research and have found that some banks will allow the seller finance portion from the seller to go towards the down payment of the loan, is that true?

Know that every long term lender will require a survey and if something comes up on it when you are trying to sell or refi, you could get stuck in hard money without an easy or quick way to get out.Is there a pre-payment penalty?

Cash out should be used as a 12-24 month loan so that you can buy another property and pull cash out at the next 12th or 24th month mark.At that point you take a portion to pay off or down the first loan and use the rest as a down payment on the next REI.

So the problem is you wont be able to source the down payment as coming from the seller (most likely), but you can certainly add as many junior lienholders as you like, after the fact.

I was thinking he supplies the down payment and acts as a silent partner.

This is a self directed RRSP or TFSA account that allows you to lend your money out to people with the backing of their mortgage for a high interest rate. 1st, 2nd, 3rd mortgages, down payments, refinances, flipping or renovation money.

Be sure to follow all formalities, such as sending via certified mail if required.Transfer Rent Payments: Notify tenants in writing that rent payments should be made to the new property management company moving forward.

I know there's seller finance and "B" lender that are good for the short term, but if a balloon payment is due say in 5 years, there's no guarantee that my DTI would be in a better place then I'd be stuck without funding. 

Take the payment in 2 or 3payments.

The problem is that your debt payments are going to basically wipe out that $400K profit unless there is room to increase revenue or reduce expenses.