Friend of mine has a townhouse, bought in 2008 for 170k, owes 146k (houses around there are going for about 130-135ish), Payment including taxes and everything is $1046.

If you tap a loan from your 401k it will be low interest, won't show up on your credit report and be low payments as well. 

I do have a good amount in savings to put down a 20% down payment.

Is it to payoff the property and have income without mortgage payments?

You will likely need to establish an account and file a monthly sales tax report and payment.  

Unfortunately rent rates are not set by the amount of their debt service payment, but by the market.  

I will be 42 when the last mortgage payment is sent off. 

Our total out-of-pocket costs will therefore be around $7,700 ($3,700 down + $4000 rehab).The numbers look like this: Rent $650 Loan payment $345 4 years @ 5% HOA $130 Insurance $13 Property taxes $67 Maintenance + CapEx $80 For new windows and HVAC Cash flow $15 During land contract Cash flow $361 After land contract Cash on Cash 56% After land contract ROI 48% During land contractAs the numbers show, there is virtually no cash flow during the 4 years the loan is being paid off, but the return on investment from principal pay down is almost 50% PER YEAR.  

They are as followsThe 3 are all located in Phoenix, AZ and all rented1: paid $180k was rented before it closed, paid cash with an HOA of $200 monthly and rent of $13002: paid $135k was rented in 1 day, paid cash with an HOA of $200 and monthly rent of $11003: paid $215k rehabbed total $260k mortgage on property is $100k with payment being $800 a month, and HOA of $50 a month rented for $14754. looking to buy a house in Colorado, where I will rent it out and also live in it.

I'm almost done saving enough cash for the down payment and rehab costs for my first BRRRR.