Consider the potential equity loss and cost to originate another loan versus your REI goals. 

Other than having a quarter of the property (purchased for $850,000) qualify as my primary residence are there other benefits, tax or otherwise, are there of living in the property?

If you have some money in the bank to cover unexpected circumstances (vacancy/repairs, etc.) and you know that you're going to struggle to put together the down payment for a multi-family, then beginning to build up some equity, experience and momentum (by taking action) isn't the worst idea.   

The BTR are excellent for building huge amounts of equity and if you do it right, have infinite returns from the cash flows holding them long-term.I also do some other projects here and there.

One other question: I believe that these are either 50% equity or 100%.

We remodeled 2 of the units and have done a substantial amount of work around the property, and we have roughly $270,000 in equity. 

Investment Info:Single-family residence buy & hold investment in San Diego.

These two factors were strong indications that we would gain additional equity, and maybe even increase our net worth.While it might be tempting to think that there is no way a house with an extra mother-in-law suite will be less valuable than a house with parking, it is worth making sure that you will have adequate equity when the project is done, and that you are not overbuilding the house.

Here are some details:- HELOC on my primary, paid off residence (current rate 8.65% could be used to do an all cash offer.- I have a second home (condo) with no mortgage that I could also take a mortgage or HELOC against, but not for 6+ months as it was just purchased.- I could go traditional loan, using primary home HELOC as down payment, so effectively carrying two notes (down payment with higher HELOC rate, balance with current mortgage rate). - credit score is above 800.Any guidance on above options or ideas on other financing scenarios would be greatly appreciated.Thanks so much!

It depends on whether you are seeking a debt or equity partner.