We’d also like to buy a house to move into in the near future and of course dropping $100k of savings into property 2 would delay that.

Given your situation, I think the best thing to do is 1) work on improving your credit and 2) look to house hack, preferably a duplex or fourplex where you live one unit and rent out the others.

Hello Everyone,In the next few months, I'll be in a unique position where I can potentially pay off my house.

I spoke with the owner and looked at the house one year ago.

Sell a house and buy a triplex.

Though the current housing market conditions can influence the cost-effectiveness of buying versus building. 

Also the title company said I had to pay all the water bills on all four houses for bills thru the close of escrow date.

May require permtis and consultants depending on the scope $70-$100 per sq ftStuds out/Addition: This involves taking the existing house down to the framing.

The main part of house is renovated and rented out.

I bought a house in a Lennar subdivision to turn it into a rental the following year.