Here are some alternatives to commingling your assets: using the Solo participant loan feature to do the deal outside of retirement funds using non-recourse financing from a lender or private source in combination with retirement funds as the down paymentusing your 401k or IRA and partnering with non-disqualified persons 

If there's not much value in the property itself and you're asking for funds to put into it, in essence the lender will be investing in you. 

Get a 2nd and get as high an ltv as you can.  

A JV partner who services his own notes, however, can teach you about the investing and the servicing side.If you own performing notes, they can turn non-performing as you point out and they will no longer be a passive investment.If you truly want to be passive, you might want to invest in a fund that invests in notes.

If I were to flip this house I estimate I would clear $15K (after RE fees & capital gains tax) which would give me plenty of funds to purchase a newer vehicle.

You are paid out of the deal and at the end of the day, the buyer is the one who funds the deal. 

If so, I assume I would need to have the funding pre-approved prior to making an offer so we could pull the trigger immediately? 

Everywhere I look people make it sound so easy, but it is not at all especially if you don't have a lot of funds to invest.

I am looking for advice and knowledge on how to go about getting into a second deal with all my funds tied up in this duplex currently.  

Everywhere I look people make it sound so easy, but it is not at all especially if you don't have a lot of funds to invest.