In the past, I cashed out my 401K(Paid income tax + Penalty).

What you want to ask is what is a good ROI or better yet, your Cash on Cash Return.I know someone who has $3000 per month cash flow.

Beginner investor looking to take the leap on our first property - about $30k in cash to put to work.

I understand they can make our life a lot easier but is it worth it if it eats up a lot of our cash flow? 

Another idea that we have been exploring is using the cash value of whole life insurance funds for emergencies. 

Ask your employer if you can have your pay split up into three deposits, one to investments savings, one to your checking account for personal use on a daily basis, and one to an emergency account you can tap into so you don't have to tap into your investment savings.

I can pay for all my problems using the cash flow from my current rentals.

Trying to save $$ so I can prepare emergency funds in case of any major repairs etc .

Retaining your current home at a 2.875% mortgage rate maximizes cash flow, while accessing $65K in equity provides liquidity for your next steps.

In all honesty my clients putting down as little as 5% tend to cash flow as well.