If the community is well-managed and there’s good rental demand, a condo could be a solid choice.

I had little choice since I was financing out of a construction loan that had little time before a ballon.

This can be very expensive and is usually the worst choice because you can't justify the cost.2.

Should it simply be one of two choices: deny application or accept application with ESA exemption even if the property qualifies for the FHA exemption?

If you are not building in sufficient capex, then these costs could be higher, if not much higher.

In general, I’m of the opinion that if given the choice it’s always better to invest in a syndication than a blind pool fund.

So, factor that into your thinking about whether its the right choice for you. 4.

Based on your description, Party 1 seems like the safer choice.

Depending how much of the neighborhood is a hot zone for renting rather buying, and which Property type is performing better than the other (meaning 1bd 1ba 2 floor renting out faster and much more consistently than a 2bd 1ba 1 floor), you can make your choice of those factors as well as other ones that impact your decision for what you wanna do with your investment.

Landlord had to move to a different state to have better access to healthcare, i.e. did not move by choice per se.