As our rental income is building up in the bank account now, we are wondering how to finance the next one.

Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Do a search for Home Inspector Training and see what is offered and teh sample reports that can be generated in 30 minutes after leaving the property . . . 60 pages with little substance. 

I am self employed and try to minimize my W2 income. 

My debt to income ratio isn’t great considering my current mortgage

Buying existing LTR or STR with proven income that may just need an update or a value add (add more units, add more bathrooms, beds rooms, etc.) and your next one you can try a riskier property that has less proven income.

I’m a W-2 employee in a high income tax state.

If you held them less than 1 year you would pay at your income tax bracket but if you held them over a year you would pay LTCG (Long-term capital gains) which for most people is 15%.You'll always be able to add money back into a brokerage account regardless of whether it's the LLCs or your own.Hope this helps

If you get a signed lease for your rental home, your lender will be able to use that rental income as qualifying income for your loan to get your househack. 

As long as all of your expenses are about $500+ less than the rental income I'd say it definitely makes sense to keep as a rental.