Lending software can be complex as if loan is a 30/369 vs actual/365 and late fees, accrued interest etc come into play it gets very technical and if it’s wrong it can be huge fines and violations.

Late to the party here, but doing a cost seg on your own is playing with fire. 

Determining whether the venture falls under a service or rental business hinges on the provision of substantial services; for instance, if a bed and breakfast service is offered, it must be reported on Schedule C, triggering a 15.3% self-employment tax.Moreover, personal use plays a crucial role in the classification of the property.

  :)Now, as I move forward, I'm shifting to option 2 for sure, or balancing my portfolio with more of these types of plays. 

I would equate it to managing yourself when you are not set up to manage properties.There is scalability in this...Now to play the Devils advocate if you get autopayments set-up you can always figure out how much interest was paid each year and what your payoff is so just decide how competent you are in that and be honest with yourself, there is nothing wrong in outsourcing parts of your business.

Situation built for the Dave Ramsey play book. 

If property is not redeemed I get a deed in the mail.REally like this play for assets that are inexpensive.. and your paying cash.. risk is minimal to nill and as long as your play is simply rent and keep very long term.. its a genius move.. most folks are so worried that you have little to no competition..  !!!! 

Or would it make more sense to get into a move in ready home and play it safe?

There is also depreciation etc. that comes into play.

I would forget that play it simply is not legal in  most scenarios IE you dont have the license to do it.. you need MLO and NMLS registartion to do any owner occ.. now if its non owner occ thats another story.