I thought my best bet would be to become an agent so I could learn how the real estate market works, gain capital, and most importantly create relationships with people who can show me the ropes and point me in the right direction.

Make sure you run your scenario by your lender, instead of just relying on your interpretation from HUD's web site.

Betting on what you don't know is rarely an effective strategy. 

@Megan Bridgette,My past experience was with HUD homes and it was so long ago that these web resources did not yet exist (early to late 1990's).Today, I would use Zillow for comparables so I would have an idea what to expect before approaching an agent for a CMA.

As Ryan Dossey mentioned if you get belly to belly with them I bet you would have ended up with a few rentals if you want in the landlord game....

I think option 3 is your best bet, but make sure you get paperwork on it from the tenant for the dispute, exact cost, and a signature of release of liability.  

I'm interested in acquiring rental properties for cash-flow, not bets on appreciation.

You bet @Marshall Downs and thanks!

I would bet that @Steve Babiak has him though.I know Brian has done many of these kinds of deals.

My bet is you're dealing with an old slickster.