They will be more willing to seller finance if you have built trust and rapport with them.

Purchased a home during the pandemic, value has gone up roughly 2.5(estimating), believe i have enough value in a HELOC to get a down payment on a second home.. is it a wise decision to add that to my plate then rent the first house for mortgage payment+?

@John Smith, 1031, death, a charitable remainder trust, possibly a 721 upreit (although that only acts like a 1031 and defers temporarily),  and possibly a sale and a purchase in the same year where you cost segregate the purchase and take whatever bonus depreciation is available (again though a weak substitute for the 1031 exchange).  

Should I wait until I have enough savings for a 20% down payment and do the same again?  

Banks and CU have something called "High Cost" rules which means a mortgage under $75K generally is not large enough to include or finance their hard costs plus fee's.Some DSCR lenders offer a $75K minimum after down payment but rates are usually above 9.75% even with good credit and carry a 2-3 year prepayment penalty. 

What must happen to make this progress payment happen?

But she said her and her broker will not submit my offer because its too low (my initial down payment) as it wont cover her commission fees or something like that?

The way I’m underwriting my own deals for expansion is that I need to be able to cover the new payment with 7-10 days of current rental numbers.

Any advice on the pros and cons of using the HELOC/HEL and purchasing outright or only using for a large down payment? 

Down payment would still be $60,000.Of course if buyer defaults on the loan I would still foreclose, and I would require home insurance/property tax in escrow like the banks do.Do you think this would work?