If I were in your shoes, I would move the equity into good, solid rental properties in an area that has stronger economics.

I think if a tenant were to have multiple bags of groceries in their vehicle and need to take it up to the kitchen they probably wouldn't be taking off their shoes in between grabbing bags of groceries or just say they are in a hurry and forgot something inside need to run back inside, they won't be taking off their shoes. 

If I were in your shoes, I would pull as much money as makes sense (make sure you still cash flow) out of deal 1.

@Annie FrazierIt really depends on how comfortable you are with it and how much confidence you have.

I have experience managing out of state properties so I’m comfortable with that aspect.

I, personally, would not feel comfortable with only $200/mo after my mortgage payment.  

Recommend you look for a size that your comfortable with managing.

But so is the cost of gas, milk, tennis shoes, and real estate.

I think people get comfortable and likely don't have the means to purchase a home of their own.

These factors combined have contributed to a situation where rents are low for 2/1 units and SFH prices are high for 3/2 or 4/2 houses.The house itself needs some general work, and I am comfortable estimating the costs on that work, but I am not sure what it would cost to turn it back into a SFH.