For example, I hate to sell anything, but I am selling two properties to raise funds for a new primary that meets my goals.Study the market and really lock in what it will rent for.

Other than paying for an appraisal or BPO (and maybe a credit report), you should not pay a lender anything until your loan funds.

Then if/when another good deal comes up, you can approach a lender and look at leveraging either of the properties in order to fund the down payment of the new property.

Would it be worth exploring the possibility of partnering with an investor somehow to help with funding?

And the truth is, if the investment property was completely passive and you had zero connection with it, such as an arbitrary stock in a mutual fund, then I would agree not to get emotionally attached to any one investment.  

Now I'm looking into commercial HUD loans and perhaps starting a fund to continue scaling. 

[I think someone else provided an example of this case earlier]-Now provided you do qualify for purchasing a house (4 units or less), you will have no problem qualifying for a mortgage with a Schedule 1 bank as long as you provide the down payment (35% minimum of purchase price) and confirm proof of fund and the source of it- On the proof and source of funds, the banks would want to see an income enough to cover the mortgage payment and other expenses. and in some cases, they would want to make sure they know how you're going to cover your expenses (housing, heating, etc..) where you live.This is usually where it gets annoying for some folks but if you can satisfy this, you should be able to qualify for a mortgage just likely any Canadian tax resident, albeit you will pay a little more in terms of interest rate, etc.

@Holly Thorsen see above for potential challenges tapping your equity in the rental.You only need 5% down for a regular mortgage, 3% down for an FHA mortgage - so why don't you have the funds?

Same goes for number of LLCs and what to fund them with, since bear in mind that CA tends to be more cumbersome and expensive to have LLCs than other states.California is generally more cumbersome than other states when it comes to taxes and filings.

Doesn't sound like it would be too difficult to get funded.