Then there’s this glorious tax season where you realize how many things you get to deduct that others can’t, while sheltering your income with depreciation, and earning tax free income with appreciation.

Your income isn't high enough for it to make sense as a rental and the closer you get to your residence limit the greater pressure you will have to sell it before losing your exclusion in whole or part. 500k right now can make $15k per year income with zero maintenance or tenant risks. 

Quote from @Michael Smythe: @Jerry NoguerasRecommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

It isn't having paid off properties that offers security, there are still taxes, insurance, maintenance and management involved. 

Gross income right now is 2700.

I am working toward passive income to live off of.

I have always used cash flow to pay off properties and lived on W2 income and still do. 

I’d hate to see you walk away from that high an income and regret it.

Taxes have to be paid, so does insurance, what about maintenance? 

So that with paying my investor 6.3%, they will get a passive income of $2,532 every month ($30,384 every year).