It's all about your comfort zone and how much attention you can give it. 

I would pay them again in a heartbeat because of the added value of weather protection on the home.I would look into a couple more quotes to give you a broad range, which might make you feel more comfortable in whatever direction you go.  

You'll want to use your skills and some creativity if you want to push yourself farther into the "profitability" side of the scale over "comfortability".  

The third option (like bottom barrel) would be to continue renting and save for bigger downpayment and wait for interest rates to come down more.Financially we are in place to buy a home comfortably under $400k.

I would also let them know you no longer feel comfortable hosting this guest.

Are you comfortable working with your CPA remotely?

While each market - real estate and stock - has it's own risk/return profile, the comfort of owning a cash-flowing hard asset becomes more and more appealing when the stock market gets choppy. 

Not sure what kind of rehab you are comfortable with, but I have seen deals in these areas under 200k. 

I feel pretty okay about it, but it's partially about your comfort level and risk tolerance (and probably the value of each property).  

For my own sake I wouldn't be comfortable walking away without at least 20-30k in personal liquidity in a 4-5% credit union acct.