Justin, You can rollover your 401k into self-directed IRA, but not into HSA, which is Health Savings Account and not a retirement plan.There are several reputable providers here on BiggerPockets who are active on the forum, just search the forum for related keywords and you will find out who they are.

My plan is to use that money for the down payment/ closing costs and use savings that I would have used for that to pay for rehab costs and ideally speed up the process for the down payment on my second home and turn my first one into a rental. 

I haven't read this one, but have heard it's a great book for new people.While you're learning, start saving some cash. 

Should we start with a flip to build up our savings?

You will have saving after recovering points in certain time.

You’ll save a ton of cash and learn a lot.

It will save on headaches and issues that your friend will have.

They pay the mortgage and my utilities (essentially living and owning a home for free - in your shoes you would be cash flowing).Then, depending on what you are doing for a job (or college), it'd be good to establish yourself at work and save enough for your rainy day account (savings in case you lose your job) and then start saving more for a rental property.

I saved 100,000$ and i feel like im ready to buy a multi family property around 70k-90k each unit.

If they can move right in and everything is there, you save them money.