Point is, even if the returns on a property are only 11 or 12 % in my area on a house such as this with the current prices and interest rates, it is still a better return than in the market using a relatively safe index fund, and is not even taking into account depreciation or appreciation, not to mention the fact that over time, more money goes to my asset column, and eventually it will be paid off.

Index funds are just as fine.  

Somewhere above you asked if anyone has used a Heloc or line of credit for their seed capital and I believe that is how I did my one and only deal.I bought a condo back in 2006 and the rates on a line of credit were cheaper than a mortgage because the index they were based on hadn't moved in a couple of years.  

Durham sits at a 4 out 100 on the crime index (with 100 being the safest).

Rocky Mount sits at a 8 out 100 on the crime index (with 100 being the safest), violent crime is twice as high as the state average, property crime is on par with state averages.

My question is whether I should "buy" points to lower the interest rate on the ~$400k mortgage from about 3.375% to 2.875% for $7,500 or put the $7,500 (along with the $100k from the cashout refi) into some other asset investment, let's assume an S&P500 index fund for simplicity's sake? 

v=FnFtorEyG78&index=...https://www.youtube.com/watch?

I thought it was very neat, but I did not understand the definition of the risk indexes, eg what risk they are measuring and what data goes into it.

Get one with the COSI index and you can map out your payments over the next 5 years and probably cash flow which will offset by maintenance.Good Luck!

Any time you're looking at an ARM, as David pointed out, make sure you understand the index, the margin, the floor and ceiling as well as terms for adjustments.