Also, I am assuming since you house hacked that you only did 5% down, which then increases your mortgage payments compared to 25% down buyers.

.- Your monthly mortgage payment (PITI) is about $2,800.- You rent out the other unit for $1,800 and maybe a spare bedroom for $500.- Total rental income: $2,300.- You’re still responsible for a $500 gap each month.Add in maintenance, unexpected expenses, and vacancies, and your costs can climb even higher.

Is it foolish to consider using the HELOC for the down payment?

There is a "joint and several" clause in every lien that means you are both 100% responsible for the payments, so always something to keep in mind. 

I’m also in the early stages of exploring real estate investment, and it’s been helpful to see how others incorporate different tax strategies and asset protection methods.

Obviously the numbers and location would determine which is the best option for me but these would be my preferred methods. 

In a Subject To, it isn't the seller making the payments.

He uses poorly thought through methods, I've listened to his "methods",  Thus, he has the high amount of  Due On Sale called in a short period of time. 

There are some great suggestions here on down payment, interest rate, servicing, and underwriting the borrower.  

When we moved, we turned it into a rental, hoping this would be the start of our real estate journey—something we’d like to continue once my husband retires.Some key details:My husband is active duty and will retire in 3 years.We have one final move coming up this summer to Raleigh, NC.Our current debts are crippling us—the high interest makes it tough to stay afloat every month.The plan I proposed to my husband:Sell the rental property.Use the proceeds to pay off all our debts, set aside emergency funds and a down payment for our next home.Free up $1,500/month from debt payments, and that also can stash in a high-yield savings account.Regain full VA loan entitlement, allowing us to purchase a multifamily home and use the house hacking strategy for up coming move.Avoid capital gains tax, since April marks five years of ownership, and the tenant’s lease ends in May.This wasn’t our original plan, and we hate the idea of using our equity to pay off debt.