One tip: focus on areas with year-round demand and check local regulations early—they can make or break a deal. 

If, a year from now, you have an extra $20k piled up because you have been serious about this, it established a bit of a track record and proves that you are a doer and not just a dreamer.I would also express gratitude that you have a partner that is so cautious.

Careful going outside state lines -- contract for deed is not allowed in Texas.I didn't think COD is illegal in Texas, just perhaps not recommended anymore, because it is difficult to comply with the rules or regulations. 

Even with a great opportunity, trust is the foundation of any partnership.In my partnership, we had already worked together on multiple deals—me as the agent and him as the investor buyer—so we had established a strong foundation of trust.

SFHs are largely exempt from many regulations such as rent control.

So you missing that investors are well compensated for the risk associated with the various policies/regulations. 

If willing to invest more effort for higher ROI, consider Option 3 (building your own team), though it requires time to establish reliable management.

Bacon is more yummy than a Christmas tree, but I bet I'm going to have a whole lot less regulation growing Christmas trees... however, before we even get to that, it's necessary to know that the inquiry is even about bacon v Christmas trees, rather than Bacon v grapes. 

Eliminate debt, establish a budget, and save.

All the regulators have become useless pawns.