However, the benefit I see here is that the four units that are already mostly set up would almost eliminate the "holding cost" period of the HML so that I could build out the fifth unit while the four are covering HML expenses, and I think the fifth unit would more than cover the difference in cost between the pricier 20 year commercial loan versus the 30 year residential loan.What are your thoughts?

I'd be trying to determine if the market was too hot or had room for growth, how much I would actually cash flow on a rental versus what I'm loosing every month in rent, and if I could get the help of a good realtor to help me identify a distressed property that has room for value add. 

It is way too broad to say S&P versus real estate.

I know for a fact that some people are taking advantage (maybe it's too strong of a word) of out-of-state investors, so the local representative would have to very trustworthy and not someone that would profit solely from my buy-in; like an hourly wage versus commission or bonus. 

It may be beneficial to conduct a break-even analysis of holding your current mortgages in tact versus refinancing the mortgages at today's market interest rates and transferring the ownership of your properties into an LLC to achieve potentially lower tax bills.A diversified real estate portfolio would contain residential, public commercial, and private commercial real estate.

Under the Florida Greenbelt Law, Florida farms for sale that are purchased and used for bona fide agricultural activities excluding wholesaling, retailing, or processing of farm products are to be taxed based on the current “use” value of the property versus its development value, which is typically much higher.

If my former landline company (United, then Sprint, then Embarq, then Centurylink) knocked on my door and gave me the service for free, I would take it and use it, but I wouldn't pay for it versus other communication options I already have. 

However, I would consider how your taxes may change if you were to register it as a three unit versus leaving it the way it is.

I realize that my logic of him having a 0% return annually by not investing with me versus an 8% or higher return + good real estate experience is irrelevant because people are emotional.

The OOS versus investing in So Cal is a heavily debated item on BP as is the related item of investing for cash flow versus renting for appreciation.