Maybe some price appreciation on property would occur and I'd have depreciation to offset rental income and such.

House hack potential of adding two separate rental income sources while living in the main house.

As far as a multi, personally if all things were equal I'd go for the multi for a few reasons.  1) Added diversification.. if one tenant doesn't pay, you can still cover property expenses with the other tenants 2) Shared capex... typically, one roof and one property to maintain but multiple streams of income 3) Less vacancy.. usually multi's rent for lower, for example one of mine is the sweet spot of 3 bedrooms for $1300. 

I would also recommend asking for reimbursement for lost income and sending documentation that substantiates the actual amount of rents you are out while this matter is being resolved. 

I like the idea of turning those investments into truly passive cash flow.The second idea is to sell both of the properties and use the funds to buy and invest in an STR super property.

The conversion from resi to comm + the added income could drive up the value dramatically.Your only real hurdles (in terms of proceeding with production) are zoning and permitting.

@Michael PrimaveraYou will not be known as a high quality landlord if that is your desire do not enter the glamorous world of low income housing. 

The reason is that you are paying a 10% withdrawal penalty AND income tax on the money.

Only a reliable income matters.Rent range - What the segment is willing and able to pay.Configuration - Two bedrooms, three-car garage, large back yard, single-story, two stories?

And quitting your job will probably not happen right away, the income from your job will help you to get loans to buy real estate.