If you’re referring to the “newbies” with $10k to their name that watch a video by Pace and get excited and pay for joining, go out with their last $5k and do a sub to with a “desperate” homeowner without revealing all the possible consequences (because they are unaware of the consequences through lack of experience and lack of knowledge and or choose not to inform the seller) then I agree, it’s probably going to turn out badly for all concerned.If on the other hand you’re referring to a seasoned investor with excellent credit, significant cash reserves, who wants to add a property to their portfolio without going through loan qualifying, and can pay enough to give the seller “walking away” money because of the low existing interest rates and or, and is dealing with a informed seller, then I find nothing wrong or negative about the transaction.  

I'd suggest finding a third property - then you should be good to go with at least a handful of DSCR lenders

On one hand I don’t want to fall victim to overpriced contracts squeezing a naive owner.

There isn't "MTR" insurance that I am aware of, so you'll want a hand in crafting it. 

The issue at hand is the difference between following the 1% rule and achieving positive cash flow in real estate investment.

I flew out there every 3 months hand picking properties from listings.

On the other hand, keeping the house could allow us to maintain an appreciating asset in a desirable location.I’d love to hear from others who’ve faced similar decisions.

.: Emotionally..... pay off your primary.Financially..... use the $$ to buy assets that make you $$...hands down a smarter use of your capital Especially if your interest rate is well below what the current rates have been. 

You don't have to catch her with a doobie in hand.

Keep a leverage player on hand, if you find a great deal.