I've had cases where it was under market rent and by investing some extra time off market and rehab dollars the return on that investment was incredible, so keep an open mind to that as well if that's the case. 

I'm treating this all as a business so if it costs some extra fees a year to save my behind from being sued and losing everything why not pay the fee?

Yeah, let tenants build you up 4 more years of equity, while paying you a little extra each month and then sell at year 10 to get that multifamily you want.  

On this new one, assuming you get an all-in cost a 180k (with your 25k in there), and you get 172.5k, then you only have 7.5k cash in but youll have the extra 50k if sold, am I getting this correctly?

It sounds like you have a great plan, renting to friends and banking the extra $.  

On the other hand, that extra "dry powder" in hand would come in handy so likely higher reward too.

Pay down extra on the principle of my first property.2.

These extra fees reward bad behavior IMO.

Currently I am mid way through with my classes to obtain an Illinois real estate license, and my expectation is to add extra capital to my investment fund by working as a broker part time outside my regular job. 

Can hit the 1% rule and be all in for under $150k with ~$15k extra forced equity (or more if you are skilled at acquisitions and repairs).