Then the rents would cover that payment plus the mortgage with cash left over.

However, finding properties that would cash flow with a 20-25% down payment on 400k property has been challenging.

Don't change jobs or income yet.Once you do and you think you can manage the payments based on your new income, maybe once you get the rooms rented.Then if you want to switch there are plenty of opportunities. 

You would have to go after the one individual for non-payment and you could only remove the other three by going through the legal process like you would for someone on a verbal agreement, which puts you in a he-said, she-said situation. 

Your son is responsible for making payments on time or ruining this seller's credit. 

Simply gifting him half the property now wouldn’t immediately allow him to claim the exclusion without fulfilling this residency requirement, I don't believe.One thought would be to use a HELOC to pull just enough equity out of the current home and use it to buy a smaller home, or at least the down payment.

Try to put a bigger down payment in than you might need to give yourself some breathing room.2.

You'll likely need a higher down payment if you can find anyone willing to finance something like this as a first time investor; many require some level of rehab experience at the very least.

In my experience that's not actually the case at least in legitimate evictions for non-payment of rent or breach of another part of the lease.  

I am of the opinion that you'd be better served using that money toward the down payment on a property.