So, I think my main struggle is freedom of location opens up the whole country, which multiplies the analysis paralysis effect and makes me less confident in choosing the right area. 

Jim Belfiore said demand from buyers in the spring gave homebuilders the confidence to push prices upward at the most significant pace in nearly five years.

Silicone valley obviously increased a lot already in last 5 years, and it should be one of the most expensive city in among the US.

@Ali Boone Cheers - not sure of my budget just yet; I'm used to having done traditional lending through banks and don't have much experience cash-out refinancing yet, but currently reading up on all that stuff and exploring options.I'm actually from Charlotte originally so I would feel a little more comfortable investing in the city....I think for OOS I would prefer something more turnkey at first unless I was very confident that I had good contacts (contractor) "on the ground."

The issue is with the second floor tenant, they've been there for 5 years and never had a rent increase.  

I realize now, that I made a huge mistake buying new and I can greatly increase my monthly cash flow for other, more important investments.

Yeah even if it doesn't end up as a deal the experience of negotiating and talking with a seller is solid and will make you more confident for your next call. 

However, for someone who is confident they can sell above the breakeven point to cover those fees (which would be about $500k in volume annually in a region with average home prices of $100-120k), the income potential is much greater with the 95/5 split.

That would increase your savings rate! 

Or, can I just have them sign the new contract which would have a rent increase and pet deposit/fee?