Is it even possible in New Jersey

[Peter Terilli]

What's up to the bigger pockets crew.

Super new to the forum. Been a Mr. Money Moustache follower for a few years now and am starting to see that despite relative frugality as compared to my peer group my best bets to pursue FI are in the acquisition of rental properties (in or out of state). I was curious if anyone had thoughts/wanted to take a crack at "what to do" to get ahead in New Jersey.

The basics:

Income: $5275 after taxes, health insurance, HSA, 10% income into 401K

Wife's business as an S-corp also allows for about 13K in "shareholder distributions" that we are using at the end of the year

Rent ‬ 1250
Student loans‭ IBR (203.22 + 557.33): 760.55
Groceries: 600
Dining out/fun: 400
Auto expenses (tolls, gas, maintenance): 260
Auto Insurance‭ ‬239.55
Vacation fund‭ 200
Car payment ‭ (3 more months!) 148.88
Dogs (vet, meds): 133
Electric 100 (budgeted, usually 30)
Natural Gas 100 (budgeted, usually 15-50)
Post tax-investing (acorns roundups) 100
2 Cell phone‭s $75
Internet ‭ ‬ $66
Water bill 50 (budgeted, usually 24-30)
Xmas fund 43.33
Renters insurance‭ 23.18
Amazon 15

Total: 4564.49

Surplus: 710.51

The question is...we live in NJ (Monmouth County). Avg. house prices and property taxes are $421,000 with property taxes at 2.03%. Currently, we are in a steal of a 1 bdrm cottage, but with dogs and a plan for a baby in the near future, my dear wife would like to acquire another bedroom and a small plot of land. Truly, moving might not be in the cards due to deep seeded family ties for my wife in the area.

So...

How would someone who's en route to FI approach this? Move? House Hack? Throw surplus cash out of state at cheaper real estate markets to try and get some form of passive income? 

Open to tweaks, suggestions, reading assignments, overhauled lifestyle changes (if also presented with how to get buy-in from a "maximalist," coming from a "minimalist.").

Hoping to join you guys at the top of this mountain and escape working "because I have to" by 50 (only 20 years to go!).

All the best,

Pete