I looked at an SFR in southeast Wisconsin that superficially looked like a good deal, but on further examination the structure itself appears to be a "prefab" house, i.e. the type of house that was built in a factory somewhere and then trucked to its final location for assembly and installation of mechanical systems.  

According to information you provided if I would be in your situation will go with 1st option because of risk factor.  I

We'd be happy to continue this model, but the new x-factor is my aging parents will soon no longer be mentally capable of signing legal docs.  

So that factor is another unknown.At the end of the day we really do not know how the larger economic picture will play out and if hedge funds can manage SFH's effectively.

Look at violent versus non violent crimes and if the numbers are average statistically for that size of a population level.Another factor is how much capital you are investing from across the pond??

Keep in mind the 130% factor is with the NEW mortgage. that 7% is high, with a lower interest rate, your payments become lower and you will see some cash every month.

Here we get spotlighted because since GM has pulled some factories our unemployment rate is higher than most states, which should be expected with a few cities supported solely by GM its workers and smaller businesses that relied on their spending, thus crime increases.

Toyota and Nissan sell you the car at cost and charge you high prices for repairs and parts just to keep the factory working.

We found a neighborhood that is in the early stages of redevelopment and home prices are still affordable, yet I could still walk to a Panthers game or the Music Factory.  

The compensating factor is the capitalization rate as it requires that different risk factors be applied.