You may be challenged to pull that much out with a HELOC on an investment property. 

It has its challenges of course with purchase price, but there are ways to make it work whether you are interested in condos/townhomes/single family or multis. 

In an ideal world, the property would have been used as triplex for decades and would fall under a "non-conforming use," which is the technical way of saying it's grandfathered in.

Challenges?

He got the 2 over assessed properties, she received cash, but since the 2 properties are "equal" in what the court assesses the value at to the amount of money she received, it is technically fair.Now, I was going to try to do a sub-to deal after I cleared my understanding of it and wanted to pay him a good % of his equity on-top however he said that this situation will only be for a couple months and he wants to be a landlord again whenever it is over.

From my perspective they save me the turn over cost/effort (and risk associated with a new tenant) and they get to save a little rent and will be very challenged to find a similar unit at the same price or less.  

So, this may make finding a lender a little more challenging that if we just found one for ourselves without our LLC. 

Challenges?

My FICO is around 740(2) Since my debt will increase significantly after the refi, I would assume that leveraging further using the $400K will be more challenging (and risky). 

Andrew, the first one will always be a challenge but you will learn to easily dismiss the naysayers with time.