I am going to assuming it's a nice house if it was your primary residence and it's in a nice location. 

I would suggest taking the route of option 2 or 3, so not only are you saving over 10k in rent per year but the residents help in paying down the debt.

I would add that the problem extends beyond Class D properties.Twice I rented B class rentals to Section 8 residents. 

Those areas are seeing the most appreciation and continue to grow with new residents moving there looking for housing. 

However, I'm short on cash (will be putting $20k of my personal money into this)  and I am exploring creative ways to source funds for the project.I’ve been quoted for a $100K HELOC on my primary residence with a 30/1m ARM at a 13.25% rate and APR, with an interest-only monthly payment of $1,016 and $3,825 in points.

I guess I could do some work-arounds -- maybe reserve one unit in the first purchase for use as an AirBnb, and reserve my own time in it when needed - instead of claiming it as a primary.Are either of you (or anyone) familiar with a finance product/loan that will allow me to purchase under $150,000 (w/ strong credit) and do much of my own work and live-in a portion as a primary residence?  

•You can show financial hardship requiring a new primary residence.

Second, Texas also allows Texas homeowners to do cash-out refinance their primary residence.

Others required that the house is a primary residence.

While I love the idea of eventually owning a paid-off primary residence, I’m debating whether it’s smarter to sell our current house and use the equity as a down payment on the new home or to keep it as a rental.