So you have to refinance to take out cash after you have exhausted your line of credit and reduce rate and go back to one loan.

This might offer more security but also could complicate tax reporting.Taxation of Y as an S Corp:If Y is profitable, electing S Corp status could reduce self-employment taxes, but it also comes with more stringent IRS rules.

Michael is correct, you would want to ensure that a cost segregation study / bonus depreciation would actually reduce your tax burden before you get a cost seg done.  

If you're switching from STR, you should expect a decrease in ROI since MTRs earn less than STRs in general.

That way I am learning while earning. 

If you have family living in there, I'm guessing they are paying reduced rent.

Consider paying down the high-interest debt strategically if it outweighs the potential returns from new investments.Additionally, understanding Real Estate Professional Status (REPS) and Short-Term Rental (STR) tax savings can significantly reduce your tax bill while building your portfolio, enhancing your overall financial strategy.

The purchase of the unit is going to be sooner a few months, you could wait to rehab both at the same time which could potentially help reduce the costs of the rehab. 

Rough est is $500k (contractor walk through) with approx $9k earnings monthly.All this said.

Yes, it can feel like "wasted" money on months where rent is auto-paid and there is no maintenance to be done, but when you get a bad tenant or two or when deferred maintenance finally catches up to you, they certainly earn their keep.At your scale, you might be able to get a bulk discount with a good PM, especially if you can show how well your current systems are working and how they'd be needed less than usual.