Investing with a ~600K Net Worth

[Leo Kane]

I am new to this site but have been looking at a variety of threads and wanted some advice. I just turned 25 and recently bought and currently own a brand-new, $1M house with 20% down in an area that is likely to appreciate a lot. I was planning on living here, but the space is too big for me, so I am renting it out for around $5,000 per month around 9/1 (city I live in is well-developed and this property is centrally-located) (60K (rent) – 10K (taxes) - 2.5K (HOA) - 1K (Misc) = ~45-48K more or less. I could pay down my loan a bit more so that I essentially break-even but would like advice on this versus investing in other pursuits. The rent will increase significantly here as nearby developments will make this area very desirable.

My first mortgage payment is due next week, and I have about 400K otherwise (mostly liquid and will be fully liquid in the upcoming months). 

I have been reading a lot about investing this past week and am now reading a book on it. It has inspired me a lot. The area I am from, unfortunately, does not have the highest capitalization rate (one of America's most dense and developed cities). I am only interested in investing in places that will earn me a higher return on investment.

How would you suggest I invest my remaining funds? I know this is extremely hard to determine, but I will give you choices:

A. Should I purchase ~3 100K - 130K properties and have no mortgage on these and have positive cash flow?

B. Should I do the same but put 20% down on a variety of these properties (maybe 4 or 5 if that is an option)? 

C. Should I pay off my house more so I have net 0 cash flow for the first year and when rent rises in the subsequent years, it will be positive. 

What would you do?