My gut tells me to use the cash flow from the property to start building a bigger reserve fund and just use personal funds to pay for the HELOC but open to suggestions or what you have personally done!

How are you able to confirm the deal is "good" without seeing the books? 

After refinancing, initial investment amount paid back with a 25% equity holding for the life of the property (meaning they receive 25% of the cash flow after all expenses/reserves for vacancy, maintenance, capex, etc. and/or 25% of profits when property is sold)2) When executing the BRRRR strategy, ideally 100%+ of cash invested is returned after a refinance, but I've seen a lot of investors still may end up leaving some money in the property (~$5,000).

However, you may want to confirm that you're first in line for the property if your background check is okay. 

Things to lookout for: - Cash reserves of the HOA.

Sometimes having the cash in hand "liquid reserves" is a lot stronger of a position than having an open end liability aka HELOC. 

Would be great if you could confirm that assumptions and options are good and what would be your recommendation for my situation?

You'll be amazed how many people have claimed they will empty the rental only to discover they've taken a few items of value and then left you with everything else.If they haven't provided a point of contact, or if you want to confirm the point of contact, you can always visit them at the location where they are detained and ask them.

I will suggest you get a HELOC on your primary residence so you have access to the cash reserve for when you need it. hold off on getting the 401k loan till you actually need it. most likely the townhouse will rent fairly quickly except if there are extenuating circumstance which will prevent it from g listed as a rental on the market immediately after

@Bob Foglia, Something with central reservations and management and access to lots of Denver population - Winter Park.