I’m personally more comfortable with SFR or a 4 plex vs a 50+ multi family. 

Hi Alex,It could depend on your experience - if you have a lot of experience in heavy rehab/construction you will (1) be qualified for the loan as construction loans require substantial experience and (2) feel more comfortable taking on the loan.

Real estate can be an excellent investment, but ensuring you can comfortably manage the payments is vital, even if you encounter negative cash flow periods.

It really comes down to what specific documents you need from the tenant that you'll feel secured and comfortable of renting it to him/her.The typical criteria would be credit, background check, renters insurance, first + last month of rent + security deposit.

Here in Chicago the most I’d be comfortable with holding is a trash out fee if they left trash in the yard.

Start small with a manageable "house­ hacking" property fitting your financial goals and risk comfort level.

I think a short-term fix-and-flip loan would serve you better because, first, the credit requirements are typically lower than a DSCR loan's credit requirements, and fix-and-flip loans will fund a portion of the purchase price as well as some or all of the rehab costs (usually through the draw process).Right now, saving your cash, rebuilding your credit, and finding both a partner (ideally with a higher credit score AND experience) and lender you're comfortable with should be your priorities.

It seems like you would want your property be close to amenities since it seems like you would trade the comfort of having your own space to being in a better area for a cheaper price but I could be wrong.

Hudson really an investors challenge is determining if how much cashflow they want vs cash.The inherited house demonstrates this:1) You didn't mention the mortgage PITI, but assuming it's low, you should cashflow well and even more if you have tenants pay the mortgage off over time.2) You could also do a cashout refinance, up to an amount that allows the rent to comfortably cover, and use the cash for further investments or personal use. 

To get your time back you have to run the numbers as see how much cashflow you will need in order to be able to live comfortable from just your rental cashflow.