Incurring debt before you have sufficient earnings to support that debt.

Based on your description, Party 1 seems like the safer choice.

Market selection is tough because there are so many choices.

The combination of Germany's stable economy, well-regulated property market, relatively low interest rates, and the opportunity for long-term capital appreciation make it a compelling choice for U.S.

First, most investors and owners of real estate related businesses are in one or more of the following situations1- they’re unable to duplicate their expertise that drives the ROI and they are at their personal max capacity as to time2- they’re obtaining high ROI by use of excessive leverage 3 - they’re obtaining high ROI by taking excessive risk4- they hit correct timing in the correct market, and this is not necessarily repeatable with any probabilityIn order for an investment or business to scale, we need the ROI (on a risk adjusted basis) to be sufficient to cover a PREMIUM risk adjusted return to passive investors; all expenses of managing the assets and the business, and a significant return to the “sponsor” providing compensation to him making the work, risk and time worth while. 

I have witnessed many funds that started on sound principles compromise those principles when they couldn’t generate sufficient deal flow to be able to invest the capital that suddenly came into their lap. 

Hard money costs do eat into the profit but a good hard money lender will want to make sure you are making a sufficient profit on the deal after holding costs, etc. 

Whether you choose to run screening before you show the unit to them is a personal choice. 

Your choice should align with whether your goal is quick resale or long-term rental income, and you should consult lenders who specialize in both DSCR and rehab-friendly options.Best regards, Stevan

Depending how much of the neighborhood is a hot zone for renting rather buying, and which Property type is performing better than the other (meaning 1bd 1ba 2 floor renting out faster and much more consistently than a 2bd 1ba 1 floor), you can make your choice of those factors as well as other ones that impact your decision for what you wanna do with your investment.