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Imho, your discussion of real estate and stock is spot on and in line with classic understanding. That is, they are both businesses and meant to be held long enough to deliver results.
Buffett uses prepaid insurance premiums (aka, floats) to finance his investing business. This increases the leverage. Premium unearned is a debt, and using debt to finance investing is leveraging. Some people argue that Buffett's high returns is in part thanks to the leverage he harnesses, which makes sense, but let's not go too far on that topic.
Your proposed method of using cash flow from rental to finance stock investing is not leveraging. You have earned the rent on your own right. After you pay for all expenses, if the cash flow is positive, what's left is your income, not what you borrow. As such, your method is asset allocation, or diversification.
As for stock investing, most people don't make high enough returns. Some rookies lose huge money. Unless we are comfortable with investing in index, we must study and try hard, to hopefully outperform index. After all, how many Buffetts are there in the world? Practically speaking, real estate is easier and more fruitful than stock in many ways.