Recently acquired our 1st rental, planning on doing a BRRR and holding onto it. 2400 sq ft house built early 80's no central heat or air.

The interest may be higher but you'll avoid MIP.

For your IRA to lend him money at well below market rates would not be in the best interest of your retirement plan, and should be avoided.

With the information you have gave me, I'd say the 5% down with PMI is the best option, as you get to avoid the higher interest on the 401k loan and the marginally higher interest on the cash-out refi, and you get preserve more of your liquid assets.

I want to avoid tenants so I avoid risk (and headaches). 

Most people who buy existing homes use this strategy especially to avoid a short term capital gain. 

Biggest piece of advice I can give is don't overpay and avoid any major rehabs just starting out.

I would think an investor and even homeowners would avoid anything with a balloon payment. 

I often break it down into the "five pillars" of protecting your assets.The first pillar is avoiding unnecessary and risky activities (don't drink and drive, insurance generally won’t cover your poor decisions) and take good care of your investments - these simple steps will help you prevent lawsuits before they even occur.The second pillar is a good insurance policy as that cover the majority of your exposure.

I often break it down into the "five pillars" of protecting your assets.The first pillar is avoiding unnecessary and risky activities (don't drink and drive, insurance generally won’t cover your poor decisions) and take good care of your investments - these simple steps will help you prevent lawsuits before they even occur.The second pillar is a good insurance policy as that cover the majority of your exposure.