The foundation expense will/would be astronomical. 

Yet, here's the thing: although we'd get a new rental property with great loan terms, and we can seemingly afford the new home payment/mortgage, it makes me a bit uneasy to take on that much more debt in a down market, but mainly because the amount of interest we'd be paying is astronomical if we did nothing to pay down the principal early on or over time; every month for years would average $2,700~ of interest payments, so we'd be breaking $100,000+ of total interest paid if we do nothing just a several years into the life of the loan.

I am not a specialist on Washtenaw County, but can say that the typical rent does increase when homes aren’t primary residents but not astronomical. 

You may put something like $1 for the down-payment and you'll have some astronomical ROI percentage :-)However, percentages don't pay bills, dollars do.

However digging a bit deeper it appears many of these locations have experienced an astronomical appreciation due to the fervent buyers and lack of inventory.

Student loans are paid out to your school directly; even if you ask an excess amount and the school pays you out, you're paying an astronomical interest rate on that money much greater than the 2-3% we are seeing in real estate right now, which is going to make a huge dent in your pockets even if your idea was to be successful. 

I’m not seeing anything on the market that would bring a good return because of the astronomical prices right now.  

Two properties adjacent to ours sold last summer for amounts that were astronomically higher than what we paid and developed for our land.

That is to say, there should still be solid appreciation over the next 3-5 years, just not at the astronomical rates we've seen in the past 18 months.

Your risk is high, wear and tear is astronomical, and your leverage is none after you allow it.