Also yes, I would prefer to be  close to my properties as I do self manage for now.

To maximize full value, most buyers do indeed prefer for the property to be vacant.

I'd prefer to do that over renting out of state depending upon your situation of course. 

Your attorney(s) should be able to advise the proper location and structure, which may vary from state to state.While there are reasons to go wider, I suggest you narrow down to a couple of states or preferably a smaller area than that.

When I asked him why wouldn’t they just stay at MGM like a normal person, he said there’s this group of people who prefer the privacy of a non-commercial property lease.

Some 4 units in my market start around the $200k point so could even buy 2 of those instead of 4-8 single families.It’s all your preference based upon your goals, but overall the Midwest is a great market.

For my long term holds, I prefer a 30 yr mortgage with lower rates as I want to lock in long term on that. 

On the other hand, if it's totally within my rights to keep the whole deposit, given they are breaking a 12-month lease after 1 month and that I've done everything in my power to address their issues in a timely manner, that would be preferable.

You could scale into a larger deal, get a preferred return with a lower risk profile, and possibly get bonus depreciation the first year as well.

Now, that home sold for $1.7M after holding it for 6 years.At this point in my life, I would probably prefer dependable cash flow and more passive so it's why I don't mind investing out of state even though I know Orange County, CA like the back of my hand and have a real estate license so that helps quite a bit.