Just one additional option.  

In option 2, your costs are $25k higher.

There is a ton of fix and flip going on in Brooklyn and I am trying to work my confidence towards that after my first project at a lower price point around 300K somewhere (CT seems like my only option). 

They have decent rental markets, and there are options where you could get in with a 20% down payment.

Not sure what market you are in, but I would talk to some lenders about FHA options on a 2-4 unit property.

However the medium term rental seems like a good option.

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Leverage is key and the diversity of options is also good.

Hope is the industry gets some relief soon and I can revisit some options to further improve asset revenue through amenities and/or roll into a better rate a lower principle.

I give them a deadline to respond, very clear terms of how we will move forward with the option they choose, and I make it clear this is my final offer.