:D As well, once I confirm funding for the first property, I would love to meet some of the real estate agents locally that are familiar with multi-family units!

Hard money and personal money for the gap funding.

I have a identical fireplace lay out in my home, wall to wall, raised hearth  (much nicer brick) and have not used it in 25 years.

Is there any chance of raising rents ?

Scenario 2: We also have the option of cashing out by selling both properties as is and using the funds to purchase a larger property that has a higher cash flow than what we are currently getting. 

You will also be able to say you owned the real estate for future real estate funding.

You will be unlikely to fund new construction with that salary, sorry.Develop plans and a budget, timeline, expected rental values, P&L.

I just figure i will use it as an opportunity to update/clean up the unit, raise rent and get a better tenant. 

Next year I will raise my rates by adding a cleaning fee. 

Taking the funds from other properties like cash flow or cash out refi and then using that to invest in the next property.You can do BRRRR through buying distressed properties with financing or with cash.