Without going into a long winded answer, it sounds like your main concern is that the balance was increased by 25,000 which put your in a less equitable position.

What's a smart approach to using debt in a positive way and not negative.

Some other investors may sit on their under-performing rentals for years without taking action...You're in the enviable position to have considerable equity build up to work with elsewhere, and there are many opportunities in Phoenix to do that.

Positive experience? 

If we would spend about the same amount of money on rent as we would mortgage over 3 years, I’d rather have the option to rent out the place when we leave to create a positive cash flow and build equity than just feel like wherever we go we’re losing money to rent.

Position the televisions so that they are out of harms way. 

Lucky that I have enough positive reviews that it hasn't affected my ratings much. 

If you are going to be investing in first position notes, then I would recommend you not start in notes.

A friend is providing down payment for hard money, and wants to secure it with a note in 2nd position.

Trying to get some feedback regarding the positives and negatives to investing in both areas!