What do I do?

[/u/koodNTfindyousername]

I kinda stumbled into what I seems to be a very good real estate situation and I don't really know where to go from here. Any constructive advice would be appreciated and funny advice would be welcome. Below are the details:

• We purchased a home in Utah (house 1) for $190K w/ $60K down in 2012 @ ~3.85% for 30 years
• In the depths of covid we refinanced to 2.5% on a 15 year fixed and opened a $215K HELOC (~9% rate), house was appraised at $615K (mortgage payment is now ~$1,500)
• We used the HELOC to upgrade the home, ~$50K.
• We put house 1 up for rent and now rent it for $3,500/mo
• We purchased another house in Utah (house 2, our primary residence) on 08/2024 for ~$805K w/ $50K down and a 3 year buy down so 5.5% year one, 6.5% year 2, 7.5% year 3 and beyond. (Mortgage payment is just under $5,000)
• House 2 was kind of a diamond in the rough, very poorly marketed, amazing potential on an acre lot and surrounded by houses value upwards of $1.5-10M, just needs some work.
• We also AirBnB house 2 occasionally ($150/night) and stay at my MILs - just to offset the mortgage.
• Collectively, not counting the income from house 1, our gross income is $250K annually.

We were really fortunate with our timing on all of this other than house 2 interest rate, though I'm guessing we'll never get covid rates again.

We want to lean into making real estate a large part of our investment portfolio, but I'm unsure of where to go from here. Purchase another property? Let house 1 pay itself off with the net income? Pay off the HELOC? Sell both homes and move to a $1 home in Italy? In all serious, we're in our mid-30s and want to own a ~5 rental properties by the time we're 50. thanks in advance and go easy on me.

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What do I do?
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