great points , as always .Seller doesnt seem to be in the mode of " I got to avoid this foreclosure and get off this property " .

My biggest concern is not having enough of a safety net for that second purchase. 

The equity in the home is the only safety net you have to buffer what will be negative cash flow long term.

I know most people say leverage into more units before paying off a unit as to not tie up funds (safety through numbers etc), but I like the idea of paying off 1 in 3 units owned.For marketing, it seems there are plenty of ways to find cash buyers for deals.

Taking a loan for $2.2MThe model is not complete and I need input on the pro-forma tab where I calculate from Revenue to Income.

Now that I'm as comfortable managing for other people as I am myself I'm switching into expansion mode.  

my partner in my timber business used this line frequentlyProverbs 11:14Where no counsel is, the people fall: but in the multitude of counsellers there is safety.

depends on tenant age, maturity and previous home ownership history. pellet stoves generally very safe 98% shut off with no electricity so not great safety net in grid down storm. and flame isnt open to being touched and can be controlled with thermostat   but as with everything from tub, pool, gym, ensure they sign legal form, require renters insurance, get your agent to include it and have lawyer draft a memo and add basic training every heating season. i am looking switch over my oil to pellet wood boiler fed by auger but its auto feed system in basement.  

I did not want to ignore the situation because of safety and liability issues.

There are just way too many what iffs in your model.  I