I'm still relatively new to this as well (about 4 years in), but always seeking to provide value first before extracting it has been really beneficial to me.

I think you could do better in your market (Raleigh) with a residential MF (duplex to quad) because it would have similar appreciation, have better cash flow, you would still be able to leverage all of the advantages of you being local (self manage if desired, able to know the market, be able to perform heroics if necessary).As for cash flow, I consistently argue that I value it less than value add and appreciation and this is why: Value add and appreciation allow me to extract my investment to leverage it quicker than cash flow would allow. 

In a state like New Jersey with the prices being what they are, the "easiest" way to do what you are suggesting is going after distressed properties in seriously dilapidated condition so that your ARV is leaps and bounds above where you purchased, enabling you to extract enough cash on the cash-out refi to pay back your investors and hopefully yourself.

Cash deal--will cash extract using a local bank or credit union after we got the leases and cash flows in place and stable for them to see.

What makes it interesting is it has several parcels of land with the sale of the house which we could probably sell off the larger parcel for about 25-30% of the total purchase price.I know the basics of Section 121 but I'm trying to understand if there is a way to extract value from our equity position in our current house to make this a better choice than finding a straight rental.Current house Purchase $215K Current Value $280-290KOwe $160k 15 year mortgage at 2.75%Mortgage + Tax + Insur $1450Possible Rent $1800-2000Possible Live-In FlipPurchase $300KRepairs ~$20k-40kARV $325-350k (excluding land to be sold off)Land Parcel Value to be sold off $80k-100kI would love to hear your creative thoughts on this situation and how I can optimize.Thanks!

First, what if a, hypotheticallyspeaking, massive new source of gold were discovered for mining....of a new technique allowed for more extraction than before. 

EnergyX, a technology company that focuses on lithium extraction, is hiring for its Austin office.https://www.bizjournals.com/au...

It is math that a market with higher rate of rent increases will arrays eventually produce the higher cash flow (as long as expenses going up slower than rent and no equity extracted).  

Note a market with greater rent appreciation will always eventually have better cash flow (assuming no extraction of value and expenses are increasing slower than the rent appreciation).  

Make sure you understand CAP rates, ROI, Cash-on-cash, etc.Get real good at extracting investor expectations from them.