I don't have any real world experience at this time so I won't pretend to know, but I will be following and learning along with you. 

@Bradley Buxton makes a very good point to make sure to do your due diligence as you won't be an owner occupant like your in-laws.Last bit of advice: Because this is a friendly deal, you want to take your time to make sure you structure it in a way that maximizes tax and cashflow benefits for both parties. 

Would love to hear thoughts from experienced investors—does this approach make sense for a first-time real estate deal?

This has been a LONG time coming. 

This quote is from Better Mortgage, but I'm wondering if anyone has suggestions for other lenders who might offer better rates.I did explore a construction loan, but unfortunately, it didn't work out because the lenders said this is my first time constructing, and they were hesitant to move forward.Once everything is said and done, the total cost of the property will be $210K.

They might be sitting on 50 million, 100 million cash just waiting for right time to deploy in cycle.

The time and amount offered would not be negotiable. 

I sent you a connection request but you can also grab a time by clicking on my website link in my signature line.

Based on this of course it would still be risky, specially being the first time but better start somewhere than just keep analysing properties right?  

(make sure you are budgeting for maintenance and management if you plan to use it) Rent will increase over time and your property will continue to appreciate in value.