If all things are equal, I would expect the 3 bed to be better. 

They're not all created equally and many don't specialize in this area of the law and are unfamiliar with legislative changes and new case law. 

With the repairs you listed you could easily have expenditures that equal 1-3 years of net rental income. 

Give each member an ownership stake equal to his cash investment.

I am not in the US, but in Canada and the province where I have a rental with a similar situation to you (and it is tenant friendly), has mandated that back rent has to be paid from Oct-July in 10 equal installments in addition to the regular rent. 

@Richard ForbesHere are the general considerations regarding 401k loans.401k Participant LoansIf your 401k plan allows for 401k participant loans, the maximum loan amount is equal to 50% of the balance up to $50k.

If purchase price plus renovations basically equal the ARV...why not just buy a turnkey property?

We each have an equal amount of cash for the down payment, etc. 

You're absolutely right to think about where the money is going to come from, but if you're new it's equally important to know what makes a good deal vs bad.

I would only do this if I can figure out a way to make it equally profitable for each of us.