However, if the rental property goes from showing a profit as it does now to generate a net loss due to the interest deduction, your losses may be limited to passive losses. 

We have started looking into the area and have learnt there are properties under $40k and generating rent around $800.

One thing to consider would be reach as big as you can on your one FHA (you can look up what the fha limit is for each residence type in your area), maximizing your buying power, then if you’re looking for another property you’ve got a big multiplex or rental on an FHA helping you generate cash to buy the next, which can be I.

It will cashflow fairly well and will generate a higher return for my money without weighing down my DTI since it won't be reported to the credit bureaus. 

They are not liquid like your stocks, but because of that they are less volatile and can preserve generational wealth (kids will spend cash but they can maintain wealth if you are passing down units of investment in commercial property). 

Location being equal then yes the cool factor can generate a premium for rent and for sale.

The outcome of your life isn't based on random probability, while schooling may make success easier or harder, it's more about the individual and the effort put into it.

No use to have a random $100 account out there.

Since it isn't generating rental income you have to rely on appreciation.

I grew up with dogs as well and would never just randomly bring my dog into someone else's house.