State Farm just told me I have too many houses and have to move on. 

The loan is with you, not with your tenant, so none of that means anything to them - in fact because you live in one unit and it's under 4, if you were self-managing you don't even have to abide by fair housing laws (at least on the federal level). 

Or paying off my debt, while I provide them with a nice house to live in instead of an apartment. 

Nice way to house hack!

They are really changing the shape of the city and it may become incredibly expensive to buy out there soon due to lack of housing.

House hacking is a great tool to use. 

Even though interest rates are high, we have a big Mircron plant coming here as part of the CHIPS act so that could boost housing demand in the coming years.I don't know the SYR market, but I did a quick search for duplexes somewhat outside of the city, and found this: https://www.realtor.com/realestateandhomes-detail/7300-Lakes....

Non-passive to achieve this level of return.Add the addition of the ADU makes the main unit rent controlled if over 15 years old.the work to add an ADU likely exceeds the effort of a brrrr that can achieve infinite return  Experienced investors are adding multiple ADUs by leveraging items like bonus density, committing units to affordable housing, etc.  

However, the house has had a new kitchen and bathroom put in WITHOUT permits.

I found houses that had not been well kept up.