This strategy was an option if somebody lost a job and needed to live off this loan.So question is would it make more sense to pay off a property off for the advantages described above (greater leverage) or simply roll my liquid cash into a 3rd property? 

@Jeff BergJeff,After rereading this a few times and then doing google image searches of what you’re describing, I’m really blown away!

I don't intend on hiring any full-time employees and therefore am wondering if I can get away with not having contractors insurance by doing it the way described above.Thank you in advance,Mike

@Kevin RominesI’m in the Buffalo Ny area looking for a program similar to what you described.

The numbers are obviously not pretty in the scenario you described. 

The issue becomes many jurisdictions literally make a judgement call on whether YOU can pull the permit, some many require you to hire a 3rd party if you want to fix stuff like what you're describing. 

but for your own, personal, investment and DD purposes, I agree an analysis like what you describe can be helpful on the LOW end in a heated market.  

@Tom Gimer I was not doubting you, I've just never seen it done that way before and all of the loan mods I've seen were done the way I described.

Airbnb is an option for the hold period that you describe, but who will clean the bathroom and wash linens between visitors?

Buying another property in the area you are describing right now is going to take a  lot of work to find just to make $10.00 I would stay where you are.