Also, there was once a small house on piers on the land, however it sustained substantial hurricane damage.

It would be wise to have a very long option period so that as long as you are in a positive cash flow situation the model is sustainable.  

So, if sustainable rents are $1650 in your area then a house selling at $200k is over priced.

I suggest one year sustained campaign at least.

At this point, I am looking to create a sustainable business.

My banking friend mentioned that with new regulations banks aren't making these types of loans since the owner doesn't have enough income to sustain the loan.  

But if the high-priced housing market in the Bay Area can only be sustained by high-paid tech employees, a market correction in tech would be devastating when large companies go under and massive lay-offs ensue.

The long term sustainability of the properties located in C+/B markets is much more valuable then saving money on the purchase up front and having a lower grade tenant and neighborhood.

Raleigh, even though 2 hours away, is slightly cheaper, has a larger and more sustainable economy, greater number of universities (within the Triangle), and a greater selection.

If you want a second, your personal income, excluding income from the property, will have to be able to sustain both payments.