@Brady Bitter since  you are buying new construction what makes you think you are getting 25% equity.

KwanzaHi Kwanza, I can help answer this question as I've worked with investors and helped them buy LTRs, MTRs, and STRs (own quite a few myself as well).

BiggerPockets also has a calculator to analyze deals, and I highly recommend you start this as soon as possible, even if you are not ready to buy.

Convert the property you are living in now to your second rental, and buy a new home for yourself. 

This could work well if you’re looking for steady monthly returns and don’t mind managing tenants (or hiring a property manager).Selling could also make sense if you’d rather use the $500,000 to diversify into other investments, like buying multiple properties or even a short-term rental on the lake as you mentioned.

Over time, I discovered mistake #2 was not buying them right.

I have not heard of one of those, but am gearing up to buy my second house and could possibly use some sort of loan program like that!  

Where you pick will depend on your goals for cash flow and your budget to buy.

So depending on what your investment goals are and what type of properties (Class A through C/D) and where in the city you want to buy, that can directly impact the level of stability one can find within the market here. 

I currently live in WA state and invest out of state for buy and holds.