Technically speaking, to develop with a higher density, then its an obvious yes that rezoning will be required.  

.- cash out refi loans have higher rate than if cash out was not occurring.  

When there's tenants already occupying the property, there's often times different leases that were signed among the tenants.Additionally, renting by room usually sees higher tenant turnover which in turn causes more work for the PM.Other challenges to consider:- Disputes/conflicts among tenants (different personalities if a tenant doesn't know the others prior)- Occupancy limits- Splitting utilities (what if someone uses more water?)

As @Chris Seveney mentioned there is not really enough equity in house 3 to get a meaningful LOC. even if you were able to leverage enough to pay off House 2 the new rate you would be paying would be higher than the existing mortgage, so you would still be behind overall.Your ROI on those payoffs vs keeping money in index funds is not very good either.Lastly, remember that cash flow from rentals can seem good until it’s not.

I have no units in South Park but 1) 3 of my 4 STR units had significantly higher vacancy than 20%.  

Higher down payments, adjustable rates, but it would allow you to leverage instead of paying all cash.

Are you thinking this new cycle of higher rates is at its peak and we are going to head back to the 3%-4% range?

If you, your lender, or agent can pull up higher comps, there may be a way for you to negotiate a seller's concession and use it to buy down the interest rate.

There are tons of beginner friendly hard money investors on here that will lend to a first time flipper, although it may be a higher rate, their expertise will be invaluable. 

Not to mention you typically will have higher quality cabinets with plywood box construction and new hardware at the end.