Higher interest is their hedge against the chance that you default.That said, there are basic protections that can be put into place besides just "your word", and a lot of them have already been listed so there's no need in restating (mortgage, alternative asset backing, etc,). 

Make sure you have a complete understanding of the conditions of these units and how much capex will really be required.How does the rent compare to other similar properties in the area, or other alternatives such as nearby apartment complexes?  

Department of Education “have forced us to cease” operations.ITT was hit hard Aug. 25 by the education department’s mandate, which was made after ITT fell out of compliance with its accreditor’s standards and “put its students and millions of dollars in taxpayer-funded federal student aid at risk,” the department said.ITT last year received 79 percent of its cash receipts from the federal student loan program.The department also placed several other sanctions on ITT, including a freeze on executive compensation and an order that it increase its surety funds from $94.4 million to $247.3 million within the next 30 days.The company said Tuesday that it “exhausted the exploration of alternatives,” which included transferring the schools to a non-profit or public institution."

I REALLY, REALLY would rather focus on REI though so I'm trying to get a feel for the potential of focusing on wholesaling as an alternative or would I be better taking the extra income and put in buying properties.

Alternatively, you can also outsource this type of work with more affordable options from countries in Eastern EU, China, Vietnam, Philippines, etc

If you run out of options, a fico/equity based lender is the best alternative in my opinion. 

All three of the paths you're considering currently are viable options, but I think there are definitely a few alternative strategies you may want to consider.Feel free to shoot me a PM if you'd like to discuss what I had in mind!

Could crowdfunding real estate websites be an alternate?

The alternative would be to put flooring over it. 

My name is Billy LaFerney and my wife Kimberly and I are truck drivers.