They said that kind of project would basically convert the property to an apartment building and requires R6B zoning.

I basically got these homes for free without using any out of pocket cash to scale up.

It seems like your ROI is basically the same in each option, but you are taking on a much bigger project to convert a single family to a four-family.So basic calculations, since we don't have a full financial picture, i.e. what does financing of each look like?  

Things like landscaping/snow removal and labor cost for repairs are going to be highly variable based on your market so you'd need to do your own research on the going rate by either talking to other local investors, running your own google search, or exploring basic services on thumbtack/angies list etc. 

However, if you ask me that in ten years....the city life might drive me out there! 

I got a quote for 8K sft retail from a construction company for around $120/sft, this includes site prep, utilities, metal building erection, exterior finishes, interior insulation etc (basically build the shell from scratch).

They'll usually jump on your suggestion because it is so much easier to sell the note than get the process of a short sale through their system.By purchasing the note to the property you basically become the bank.

Quote from @Andrew Syrios: So basically note investing is really trashy and you're looking for a continuous stream of income but instead of alimony or child support it's loan payments instead? 

We provide basic cable with sports channels, or youtube TV, depending on the location. 

A basic set of subscription docs will cost you, typical $10k+ at least for the first deal.