This choice can influence the best path for you.

Alternatively, your in-laws could partially gift the property by using the annual gift tax exclusion ($34K per couple annually), lowering the sale price and their taxable gain.

Alternatively, if I can find a lower cost single fam home where I can cash out 100% of my investment I would do that but those have been harder to find recently. 

This means that someone who makes $43,000/year would now eligible to buy this room condo, and have access to a vehicle through which to build equity in an asset as an alternative to paying rent. 

A small multifamily property is a smart choice for a first investment—it offers a great balance of income potential and manageable scale for someone new to the space.Don’t worry about being ambitious; it’s clear you’ve done your homework, and you’re already ahead of the game by setting a clear goal.

Myself I thought about 2017 was going to be kind of the end of the 10 year cycle and I actually put a presentation together called the Pivot looking at alternative ways to invest in RE. 

How does one define design choices, etc?

For what you are trying to achieve you'll want to stick to the suburbs and a few choice neighborhoods on the West Side of the city.

So you didn't do anything wrong, you just didn't know.As for alternatives, most counties have an appeals process... but you will likely lose if you go that way.  

TX market has been a popular choice for those seeking higher appreciation.