We would like to have our equity from this house (~$80k) to use to fund other (safer) investments we have lined up in Indy and Ohio.

She laughed and said email her my proof of funds and to contact her only and hung up the phone.

My answer is depends on how fast you need the funds.

@Taneka Nesbitt, POF is proof of funds.

If they are only seeking a check every month and the largest amount possible based on the equity of this other property then sure it's a fine decision.A couple other thoughts though:With a smaller multi-family a vacancy is felt more financially than with a larger one, but the extent of that is influenced by the market's local metro and property location; andWhy not use some of the equity from the property to fund the purchase of the smaller one and then have two properties generate (probably) the same amount of income or more with debt service on both.  

I will fund the rest as a 20% down payment. 

Anywhere really provided you have the capacity, funds, knownow, nerve and the stomach to take it all on.  

I want to know what ways do some house flippers fund their flips ?

Be very careful. depositing "client funds," is delicate.

I have asked why the current owner has not raised rents or terminated the leases, but have yet to get an answer.