In this instance what I would do is get the deed in lieu from the borrower so you ahve the property again and get a note from them but have an attorney draft it to see if you can include a confession of judgment - meaning if they do not pay then you can get a quick judgment and possibly garnish wages.I would also have them put a small down payment as part of the note and only accept a check that way if you ever did garnish you have a copy of a check so you know where they bank.unfortunately you are right they can stop paying on the note and its unsecured so its a risk but out of all the options this is your best option.

Do class b for less risk and less effort.  

Potentially free parking for your guests.Condos can work too, but there are more variables out of your control.

This was my first deal, and house hacking made the most sense because it lowered the threshold for risk in my mind.

Keep track of 3 buckets.1) Owner occupied portion - potential deductions for schedule A2) Tenant occupied portion - potential deductions for schedule E3) Jointly occupied portion - likely prorated for both schedules.There are nuances to this, so I recommend looking for a tax pro who can coach you on this. 

Whie DOS lender risk may or may not be high, being ininsured is... well, enjoy your 'asset protection'.

Does anyone know of any folks in the Austin, TX area available to show properties to potential tenants?

Communicating timelines and expectations upfront can help prevent losing good prospects to other properties.I'd say it's a potential red flag if they want to sign the lease without viewing it.

Knowing that you're new in the forum and to avoid a potential reaction of the style "Who's this idiot who thinks he knows my country better than me?"

Many would suggest against RE investing using retirement money but if you go into low risk opportunities it can be a powerful diversification method.