Is not a new construction, rather making it a liveable place, so I could rent it later on to at least cut my mortgage payment in half and be able to focus on other investments. 

If you present it to him as 1 month deposit being returned and will he agree to accept half to settle things and explain otherwise the money gets returned to both and they will have a dispute about it for a long time potentially.

So i knock on the door and offer them 80k for the house AKA house 3. it sits on about a half an acre that is adjacent to house 2's half acre.

West Town is a GREAT neighborhood and you will see solid appreciation for sure...I've found it easiest to ask what my end goal is, how fast I want to get there, and what personal sacrifices will I need to give up to get there in the desired time.However, I am not following why you would move UNLESS YOU ABSOLUTELY LOVE  the new house and it's a PERSONAL PREFERENCE.If you want to invest why not use the 20% down payment on an investment property and stay in your current home?  

A few years ago when I did just under market rate rent increases, half the tenants left, leaving with 114K in bills to pay out of pocket.

-he pays $550 of the $930 mortgage, and half of the utilities, which are not split, and are in my name. am I overreacting, or do I need to do some damage control on the tax front?

I can't imagine it's worth half that!!

The moment you try to cancel they would take half of that amount as retaining feeA company dealing with such ethics are not to be done business with

I have owned a duplex since 2021 and have lived in one half and rented the other.

Bryson, like other markets, has a lot of half-hearted listings, meaning people that have a second home for themselves and would like guest to help them pay the bills a little.