However the form/procedure is quite confusing so I was wondering which of the below would be the better alternative:1.

If your numbers are correct, the only decision is whether you want to take a W-2 job to accelerate your plan.Personally, I would take the W-2 job to accelerate the plan.

I stumbled into real estate investing while looking into ways to make passive income to supplement my regular job. 

There's also a property in that area similar build and original just like the subject property, for sale at $170,000 and has been listed for over 140 daysI am wondering if you comp the property just like you would with a SFR, this home was built in the 70's and has no foundation built in 1970.

Very nice young lady. location is right in between both her jobs.

Also you can take a second job to increase those 2k savings, or grow inside the job you already have.

This strategy was an option if somebody lost a job and needed to live off this loan.So question is would it make more sense to pay off a property off for the advantages described above (greater leverage) or simply roll my liquid cash into a 3rd property? 

Have jobs now!!

It looks like you have done a good job landscaping so I'd lose the potted plants.

I’m starting to wonder if that’s excessive