This should reduce future flood insurance rates, increase the marketability of the home as well as decrease the chance of having to go through this in the future.

I think reducing the rent until it is fixed is a good idea too.

You can buy the rate down a lot more with that option, than you could with a permanent rate buy down.The ultimate goal would be do reduce your interest rate enough for the first 18-24 months and then refinance once rates come down (because they will).  

The only way you can leverage your first equity is to reduce the LTV by increasing the value of the first, then you can put more debt on the first property.

If you're already tearing into it, this is a good time to do what you an to reduce noise levels.

This takes a little more work, but it's the most fair and reduces the likelihood of tenants that squander utilities.If you choose #2 or #3, there are considerations:Start with an average.

The homes would be small enough to limit/dissuade any partying and separated to potentially reduce noise complaints.

If you have the $50k to prime the IB pump, it is simpler and more direct to reduce the debt or buy good real estate. 

Many rental property owners time their leases to avoid vacancies during the holidays/winter and that reduces inventory.

Just a deck, the most odds in my favor to reduce risk.