Received a down payment from the buyer and used that to pay back some of our HELOC because their down payment was not as much as ours.

For instance, if you've determined that your max down payment ranges from 3.5% to 4%, ask yourself: do you have the 4% for the down payment plus an additional 3-4% for closing costs (Yes, be prepared to pay the closing cost for the acquisition of your properties) on a $1.3M property, at your disposal?

I want to sell my home and use the gains to place a down payment on a new home as well as purchase properties in a lower income area for rental properties.

Wholesalers always like experienced investor but people just starting also need deals and they simply just don’t know to go to wholesalers if you can build their trust of wholesalers it can go a long way, then introduce them to hard money as a way to finance the rest of the deal- they don’t need income verification with hard money good luck :)

Completely free, tenants just have to pay fees for ACH/card payments and screening.

I’m not opposed to the idea of seller financing but I’d want me $14k initial investment as a down payment. 

What I am unsure about is if the whole 60-40 rule around payroll deduction vs owner distributions within an S-Corp can still apply in this situation if the filing entity will only be the S-Corp but the payments are made out of LLC #1, the disregarded entity owned wholly by the S-Corp.

Then the lender will borrow you the $200k at a very high rate hoping you fail to make payments. 

But still, find your market, and find a realtor you trust to help you find a property and have good contacts

Putting real estate assets into an LLC or trust are all terms I hear about but am wondering if that would be appropriate and/or necessary in this situation to off set any potential liability?