Obviously this is not hard and fast, as you can find dramatic variations in list/sold pricing.

Either lower the purchase price of the property or look for some variation of seller financing.

Everything from cabinet height to which 3 shades of white we needed on walls and baseboard and ceiling (who knew there were so many variations of white?) 

US has variations but not instant and easy like in Canada.

Are they absorbing profit variation year to year, with some very lean (or even negative) years in which they invest in major repairs balanced by very profitable years?

I have seen many variations on this question...

What if you tried this variation of option 2: instead of buying with cash and refinancing at 85% appraised value, just buy it directly with the 85% LTV portfolio loan, and then refinance when you're ready?

The variation is due to local decisions such as including trash in the property tax or including local voter approved bonds in the property tax - my resident city is infamous for outrageous education bonds). 

@Jay Adams Your best bet is to ask here.Property taxes will be 1.1% of your basis (with inconsequential variations in different communities).Your utility costs - assuming you can't sub-meter - will vary based on property type. 

However, you could also do variation of 2.