As you alluded to, sometimes a passive note investment purchased for monthly payments “goes south”, and becomes an active participation investment, with plenty of additional capital required for legal fees, forced place insurance, and property taxes.  

@Dan AudinoFor path #1, is your eventual goal to rent out the property?

I own a home and have one rental property in Southern California.

Phoenix has a pretty diverse market, and while there’s no official A/B/C/D breakdown map, you can generally categorize areas based on price points, rental demand, and appreciation potential.For BRRRR, you’ll want to focus on places where you can still find properties at a reasonable price, add value through renovations, and get solid rental returns.

To minimize taxes, consider the following strategies:1031 Exchange Before Dissolution – The corporation could complete a like-kind exchange, allowing investors to roll their ownership into individual properties while deferring capital gains tax.

Yes it's hard to price this out without knowing the property details and what grade materials you’re using etc. 

Pricing a rental property too high is a BIG mistake. 

And the hardest part of all this is finding sufficient labor to rehab/manage the property. 

Long story short, I have no primary home and the property the guesthouse is being built on is a LLC with 3 years remaining of 20k PPP.

Just do a little bit of research and connect with a great property manager.