It seems you and your husband have the ability to make a property more desirable and I would try to stay local for the same reasons you listed. 

I would rather earn $2000 per month at a 12% rate of return than $500 per month at a 1000% return.

That's a tremendous amount of your hard earned cash to spend, and the market is tough right now. 

But let HIM earn it.

Also make sure to build on a property located in a desirable location with larger pop density and if holding for rentals, charge median rent for that market as lenders want to see a bigger pool of buyers/renters available to occupy/sell. 

They are often located in desirable neighborhoods and are close to good schools.

Though I would caution you on hard money lending until you understand the industry a bit better, that can be very rewarding but you have to be able to do your due diligence on deals because you're turning over your hard-earned money to an individuals project, often a flip. 

We are buying new construction in the most desired areas of the market, and buying the smaller properties in the neighborhood, not the big ones.

I'll just add that in addition to offsetting future tax liability, I'd like to offset current taxes as well, during my highest earning years. 

There are more complicated strategies to maximize larger listings that involve having like multiple listings for same property and do individual room rentals when it is slower and then for larger length stays, larger groups, and more desirable dates you'd book the whole space, but I think its easier to just do two separate.