Essentially there are investors out there that can build a large enough portfolio with little debt that can cash flow enough for a great life.If you want to scale to many properties then you will want to consider leveraging your existing properties.

There could be a lot of new builds going up in the outskirts of a city, but existing properties in the city closer to amenities may still be desirable. 

As @Chris Seveney mentioned there is not really enough equity in house 3 to get a meaningful LOC. even if you were able to leverage enough to pay off House 2 the new rate you would be paying would be higher than the existing mortgage, so you would still be behind overall.Your ROI on those payoffs vs keeping money in index funds is not very good either.Lastly, remember that cash flow from rentals can seem good until it’s not.

I understand home designs are pretty expensive, and cannot just be applied to any lot/existing neighborhood.

It's feasible for you to use an existing platform, most likely ethereum, and build your own variant of coin with specific conditions for smart contracts.

This amounts to lost opportunity because if you had purchased RE, at the closing it can start producing return. 5) ADUs detract from the existing structure whether this is privacy, a garage, or just yard space. 6) this is related to number 1, but there are many more buyers looking to purchase homes for their family than there are RE investors looking to purchase small unit count properties.

They lend you the money you need to buy their house.Subject to - you buy the house subject to the existing mortgage.

Your first post sounds like a purchase, but this statement "The $20,000 was when I refinanced and did HARP with Wells Fargo twice." makes it sound like a refi.If it was a refi, was this $20K an existing debt of yours that was not caught and paid off on the refi? 

Maintain the seller’s existing insurance.2.

Present the existing tenant a PDF with all of the rental comps and Rentometer printout showing what the market rent is.2.