2) Paydown the mortgage on the initial house and refinance to get rid of PMI to lower your PITI payment.

Quote from @Bruce Woodruff: After reading all the great advice, I'll reiterate what you seem to be missing:1) You must (not might, must) get rid of your PM.

Some sold off and are happy, most insisted it was going to hit $100k and now have a monthly payment they can't get rid of until they break even with interest if Bitcoin ever hits $20k again.

I would get rid of that immediately.Second, I would ensure your rules are clear, in writing, attached to the lease, and posted in locations where the occupants can't possibly miss them.

These all require applicants to submit an acceptable Letter of Explanation addressing each specific issue and occurrence.Rental HistoryBecause a current landlord may say anything to get rid of a bad tenant out of desperation, we also require information for the previous landlord of all applicants.

I'm absolutely horrified of bees/wasps and would gladly pay someone to get rid of it even when it's an old dead nest.

If the seller is getting rid of a lot of furniture I will ask if they are selling the house.

On another note something that would reduce general inflation is getting rid of the laws that force (limiting competion) auto manufacturers to sell cars through a franchise dealer model.

It probably makes more sense to invest it than to pay off the mortgage but I can definitely see why someone would want to get rid of their debt. 

Talk to your insurance company - depending on your deductible and potential increase in future insurance you may or may not want to put in your own claim.I would also probably consider cutting my losses and getting rid of the tenant asap.