I later purchased my second home in 2006 right before the crash using sketchy financing. 

This was a obviously a different type of pullback compared to the more recent real estate crash, so I would love to hear any differences or similarities.How did prices of real estate act leading up to the peak and thereafter? 

My philosophy is if you buy right and are conservative with your numbers, what happens to the market on a macro level is less important because you have protected yourself against a potential "crash".

There are people here who can survive a crash worse than the 2007-2009, there are people who will get devastated by the smallest of economic downturns ... 

They did not learn much from the 2008 crash and are beginning to swing back into a dangerous zone.

I don't need it liquid, unless of course there is a market crash coming, in which case I could use some of this money to buy discounted stocks.- If I go that way and use passive real estate investing via online platforms, which I never tried, I'm wondering if the returns are really at least 7-8% on average, as I read about it.

What would prevent them from getting you on the hook, and then having a phantom offer arrive in order to drive your current offer up?  

You don't have to answer if you don't want to.I do hope the sheriff arrives soon to give this tenant the boot.  

My goal is to get a property producing cash flow before kid number 2 arrives. 

But with the crash I was able to pick up a small house in Norwalk for 150K with an FHA loan.