Option 2: We pay cash to build a small 2/2 cabin initially.

I’m not sure if it has a pay bill feature, or checks.

This leaves you with having to pay tax on the FFE allocation anyway. 

.- Cities like Toronto will levy another tax (Vacant Home tax) equivalent to 1% of the current assessed value of the property if the property is not occupied (rented, owner-occupied, family occupied, all count as occupied)- Land Transfer Tax: while the Province of Ontario charges anywhere between 0.5 - 2% of Land Transfer Tax when your transaction closes, you should expect to pay this amount twice if the property is in the City of Toronto .

Rates are high, usually in the high 8s or low 9s, and you may pay 2-4 points on the loan. 

They must provide quality service, or their clients won't want to pay the price.

Sellers are notorious for not communicating any changes in their unit counts to avoid paying taxes.  

Granted new construction probably won't appreciate as much and you'll pay a slight premium for the property.  

This implies paying down is saving 6%.  

I have noticed a lot of investors are seeking out cities that are offering lower priced lots and simply adding a Modular or Manufactured and capturing a very nice cash flow.There is a new trend starting in Florida and in other states where an investor buys a piece of land or lot and add a 'Tiny Home".