My end goal is financial independence and my plan is to use my savings from my W2 job to invest in more passively managed real estate that will cash flow positive and build equity over time.

I found myself in a similar position about 5 yrs ago. 

Be positive and look at it as a learning experience 

I guess I'm undecided because a primary residence is not going to generate passive income for you so I see no net positive with either option.

When you get to a position that you can loan the money you worked really hard for, and I hope you do, I'm sure you'll think differently, Ben.Account Closed is right.

If you have dead equity you can access and still have positive cash flow properties there is no reason you should sell, unless they are SFHs.

Doing what’s been described will not maintain the aging on the original invoice though.

I don't want to be in a position of looking for new Tenants so soon .

The issue I keep running into is that lenders want to be in 1st position.

If you did decide you still wanted more protection you could place the lease under an LLC, in that the property is under your name but the Tenant is dealing with and interacting with the LLC which is on the Lease, in essence if they sue due to any management mishaps they would be suing the managing LLC and it would give you some protection of which if they got through that then you would fall back on your second line of protection, your insurance - this would also let your LLC season and position it to buy property in the future.