Congrats -- the detail on the steps looks cool! 

The issue with answering your questions is that every individual has different goals and ways they should approach the "next steps" depending on their financial situations. 

What would you say was the best action step you took to get over the hump from property 1 to 2?

You can get a quote on how much the taxes are gonna be in the future, so you can calculate your expenses more precise.I’m also just learning and haven’t done any deals yet, but these steps seem reasonable to me.

Or is it beneficial to pass it on in an estate, for the step up in basis, and then we sell without capital gains?

I don't have to hit a home run on the first deal, I just need experience + a modest profit) 5 Steps  ( simplified) 1.

As others have mentioned, start the eviction process and if he just moves out great, but if not you are at least taking the steps to get him out.

Here are the steps as I see them: Find a realtor and communicate to them what you are looking for and for what purpose.

I think the big step is the one you just took in engaging with the community, and the next big step would be to set your criteria to help you start searching for your first property.  

A lot of the other steps have been taken care of with the first note such as the deed of trust, title insurance, property insurance.