If you can reduce your personal liability on the mortgage to $400 per month and that is acceptable to you, then that is great.

Obtain a home equity loan to help pay for our new home and reduce/eliminate personal asset?

Welcome to BP 🙂 I’ve never done a house hack before, but I have sublet out rooms in a house that I’ve rented in order to reduce my overhead, while still enjoying the amenities that a house has to offer (mainly garage & backyard).

Suggestions:1) get good rental property insurance that covers loss of rents for covered reasons: fires, etc; 2) be a good landlord and treat your tenants as customers you will reduce liabilities with an ounce of prevention; 3) Get umbrella insurance which also helps to covers your assets in a suit; 4) IF you get an LLC you must run it as a separate business or it will not provide you any protection (I'm not an attorney, but that's my understanding); meaning if you combine your business funds with your personal funds, they will be able to demonstrate it behaves as a straw company and really the courts should ignore it as a separate legal entity (my understanding of the risks).  5) LLCs can make lending/borrowing more difficult, until you want to borrow non-conforming loan funds (non-Freddie/Fannie) or you hit your 10-15 property limits with Freddie/Fannie, at which time you'll need to go to commercial lenders who will WANT the property/loan to be in an LLC.  6) As you grow your portfolio keep in mind conventional lenders will look at your DTI (debt to income) ratios. 

Once AL started re-opening from Covid19, we reduced the rent price to $1,850, with a first month $500 move in incentive discount.

However, if you have plenty of savings and/or income to invest and want to save your time and reduce risk just buy move-in-ready property (or cosmetic rehab only) off the MLS or in good solid rental areas. 

In many areas, realtors can reduce the potential discrimination as well by landlords who are not well versed in the law and may act irrationally. 

House hacking means having rental income to pay expenses and reduce one's cost of living.

Be advised, a number of banks have closed or severely reduced their HELOC programs.  

Appraisal (if the appraisal that your lender engages (the only one the lender will base your mortgage on) comes in less than the offer price, the seller can reduce his price to the appraised value and all continues on - or you can walk with the return of your escrow; if the seller won't budge and you still want to buy it, you would have to pay the difference between the offer price and appraisal at closing).3.