Not only is land so expensive, but the process of rezoning the land not only requires a lot of capital of soft costs that are really expensive and often not financeable, but then you have to build on it which is also not cheap.

Namely, that if a tenant (in this case accompanied by a whole family) ends up stop paying rent and I would be on the hook for both covering the mortgage and dealing with open ended legal costs and time.

Ignore the $1,250 per month because that's your cost of housing, if you didn't pay that on the home you'd have paid that in rent so that's a non factor. 

With running this "business" there will be operational input costs.

These platforms typically have billing policies where you pay a per unit fee per month to the software and you get regular updates and support each month.There are a number of low-cost platforms available that are able to offer you a lower price by passing along some of the costs to your tenants (payment processing fees, applications, tenant screening, etc).

WHAT IS A COST SEGREGATION STUDY?

Here are some indicators to help you assess a buyer's seriousness:Questions: Serious buyers will ask detailed questions about the property, such as maintenance costs, neighborhood amenities, and property taxesStrong Offer: If a buyer makes a strong offer quickly, it often indicates a high level of interest and intent to purchasePrivate Buyers: If approached by a private buyer, ensure they provide a Letter of Intent (LOI) and proof of funds.  

Determining the cost on something like this is only something you'll be able to find out by talking to the city.

To leverage the equity for financing my next deal, a second mortgage seems like a more cost-effective option.

I would need to consult tax consultant for this however I expect to reduce my effective costs by ~$1,495/month (based on a 32% tax bracket).2.