I am self employed and try to minimize my W2 income. 

Has been working well from 2008 onwards till date, but you should have capital and should have alternate income to support the property expenses.

My debt to income ratio isn’t great considering my current mortgage

If you held them less than 1 year you would pay at your income tax bracket but if you held them over a year you would pay LTCG (Long-term capital gains) which for most people is 15%.You'll always be able to add money back into a brokerage account regardless of whether it's the LLCs or your own.Hope this helps

I’m a W-2 employee in a high income tax state.

If you get a signed lease for your rental home, your lender will be able to use that rental income as qualifying income for your loan to get your househack. 

As long as all of your expenses are about $500+ less than the rental income I'd say it definitely makes sense to keep as a rental. 

My recommendation if you decide to invest out of state is to choose cities in safe and economically diversified areas with above-average income and population growth.

You can/should sell if you don’t want the steady rental income and you don’t plan on investing in real estate for the rest of your life.

Section 8 is guaranteed income on the first, allowing me to scale my business.