Costs for rentals can quickly deplete any CF you have and the less dollars per door, the more risk you assume.

With this additional expense, that would mean depleting the savings we’ve worked so hard to build over the past few years.To add to the situation, my wife and I are expecting our first baby in just two weeks!

Yes it brings in cash right up front, but after that cash is depleted, there is no money for future upgrades.

So adding one more unit to a duplex may deplete equity gain even if it improves cash flow over here. 

I wouldn't recommend an all-cash purchase, especially out of state as this will deplete your cash reserves (please don't go buy an $80k rental in the hood :-D ).

Also look into lenders who allow asset depletion to qualify. 

We could pay off my student loan in full right now, but it would deplete much of what we have saved for investing.

@Michael MorenoAccording to your fact set you are running a deficit right now burning cash/depleting your reserves even before making the additional principal payment.  

Even if I’m upside down a total of $1,000 per month on PITIA + CAPEX that gives me 10 years to run before my reserves are depleted.

The HOA also makes my neighbors take care of their house so my property value isn’t depleted by them.