Option 2 is high risk, as financing may be tough on your situation.

And for an OOS, I always advise to keep things simple at start, don't get greedy, go for quality and consistency, then work on maximizing monetization later. 

In fact the demand is stronger than I've ever seen it, though prices are high.

As inflation drives rent growth, properties in stable markets like the Midwest can continue to deliver returns even in higher-rate environments.Market Conditions Favor Real Estate RecoveryThe commercial real estate (CRE) market has faced significant challenges in recent years, but signs point to a recovery:Bottom of the Market Cycle: CRE appears to have reached its low point in late 2024, with 2025 marking the start of a slow recovery phase.Limited New Supply: High interest rates have curtailed new construction, which should drive rent growth in the coming years.Policy Changes on the Horizon: There is growing discussion about potential policy shifts under the new administration, including a return of 100% bonus depreciation and lower interest rates.

You want lower land cost with high rental demand unless you're a reno expert and flipper which not 1% of real investors are. 

Normal mortgage rates are in the high 6's now, for a personal residence, and higher for an investment property. 

Post Dodd Frank sellers have continued the same bad practice of selling houses to occupants with financing at selling prices that are way high, can't be justified via any type of 3rd party valuation (appraisal, zestimate, tax value, even recent sales in the same area).   

I am not a fan of concessions as I believe that it will attract lower quality, shorter term tenants.

BiggerPockets also has a calculator to analyze deals, and I highly recommend you start this as soon as possible, even if you are not ready to buy.

BiggerPockets also has a calculator to analyze deals, and I highly recommend you start this as soon as possible, even if you are not ready to buy.