I currently invest in both, the path of progress are great but you are betting on the actions of others, so while the pay off is potentially huge, it sometimes doesn't work out as planned.

If by commercial real estate you mean purchasing rental properties, you could probably find a property being sold by the owner, or another investor, and work out a seller financing deal with them where you put 20% down, and make payments each month.

Is it better to try to work out terms with the bank directly or go straight for a subject to purchase?

Know your market and work out the numbers. 6.

It's all about negotiation, I managed to work out a good split terms.

Like others above, I would caution you that buying rehabbed properties in that price range are almost certainly going to not work out for you in the long run when you are investing at a distance.  

What I really got from this is that as I knew, the tax code is really complex and I should definitely have a qualified CPA in my team and work out tax strategies beforehand.

It may all work out fine, who knows.

Large families with kids were routinely flooding the floors. 

Work out all the details with them.