(The answer to this is very important as it gets you closer to understanding what the seller's bottom line is)I hope this helps a little.

I have two renting the bottom floor that signed Oct 1 2018 and one in the top floor unit that signed feb 2019.  

This is the bottom of the barrel when it comes to hiring work out, the very lowest tier of competence that exists.

TL:DR, bottom line is even with the best planning, you might need to head over to deal with an issue.

Overall, your bottom line will be similar; the numbers might be a tad 'tighter'.

His hypothesis is basically do I take out the equity in a property and hold it as cash to purchase properties when the market bottoms out and properties are cheaper.

A $200,000 will rent for $2,000 (1%).Bottom line:  It costs more to purchase each dollar of rent as the price goes up.So instead of buying a $125,000 house, try finding 3 houses that cost "all in" about $40,000 each. 

I would definitely consult an attorney just so you make sure you cover everything that could possibly affect your property, bottom-line, and liability.

I was a ready and solid buyer at the bottom of the housing crash.

Retail in the bottom, apts or suites on the top along with air rights (very important).