Stepping into REI- newbie content

[Jeremy Poissant]

Hi all and thanks in advance for any advice you're able to offer on my situation. My wife and I are under contract in our current home and closing in a few weeks. We will clear around 60k to put towards the next place. Our intent was to move up from our current home with the main reason for the sale being a move into a better school district for our two kids. We've changed our search from the nice in ready 300k home to wanting to build. However, I do not want to rush into a home build so we are placing a step between. The questions I have pertain to that intermediate step. We have identified two properties that interest us. The first is a 1920 1000sf 3 bed l 1 bath bungalow which is in great shape. Listed at 125k. Would likely rent for around $1000/month. Second property is a 1989 rambler with walkout basement. 3 bed 2 bath listed at 199k. This I estimate would be able to be fully updated cosmetically, with the addition of a master bath where currently there is a laundry and addition of mud room/ laundry off garage and one additional bedroom in basement. That would bring it to a 4 bed 3 bath and likely in the 240k range. My question is: which would be a better move to make until we find a lot to build on and are close to completion of the new home. Timeline for a build is in the 12-18 month range. I would want to preserve as much of the 60k capital from the sale of our current home to put towards the construction project and acquiring the lot. Three options are: buy and live in the small 'rental' and hold it after finishing the project as a cash flowing rental property. Option 2: buy the rambler property and rehab it while living in it then sell, option 3: buy both and live in the rental while rehabbing the main floor of the rambler property then move into it and rent out the small one while finishing be rambler basement before selling it. Your thoughts?