Zoning Ordinance ExceptionsSome properties in the target zone don’t meet the minimum lot area or width size requirements under the zoning ordinance, yet houses exist on smaller-sized neighbor lots.How could these properties get approval for development?

Borrowing against your paid off house without an income puts way too much pressure on the success of whatever deal/project you decide to pursue. 

So I would suggest keeping your STR property geographically close and doing as much as possible to keep your profit% high as possible.As far as the actual house you use, I would just say - be honest, be fair and strive for the best area, most amenities, cleanest house, best communication, and any other extras you can get.

I’m a relatively new real estate investor with one house-hacked rental under my belt.

Everything in house.

However, even though every house, market, and buyer may be different, these few design elements work literally anywhere.If you have double sinks, use double mirrors and a vanity light above each mirror!

In short, I can afford the additional $1100/mo cost of a second house, even until I rent it out.I have around $35K in HYSA and emergency funds that I could use for a down payment, but that's less than 20% which would be required for a conventional loan, assuming full purchase price.

By the time it was all over, the court fees, attorney fees ate up the entire EMD and then some --- this seller never intended to sell the house. 

Is it like you sold your house and don’t have to pay for the profit?

@Jules Aton it never ceases to amaze me what tenants will do because it's not their own house