Then net out the utilities, cable, internet, vacancy, furniture cost, etc..

Out here in the flatlands, folks have a lot of brown/natural wood/beige furniture & linens, so gray is a little too trendy for some properties.

When we arrived we peaked in the windows and you could see a bunch of ratty looking furniture (odd for staging I thought).

it seems as if option #1 allows you to quickly scale with less money (basically furniture and a security deposit) but has the downside of lower margins since you're not building equity.I've also thought of other ideas such as buying a few properties under a llc with several other investors, where the total cash per person would be the same as if you bought 1 property by yourself but it's diversified across different markets and reduced risk.

If you're in a very competitive market you may want to get the house staged (filled with furniture) for marketing purposes.If you must list it in such a way as to disclose the address (for example you list it with an agent as a rental) please spend the extra $15-20 bucks to install a simplisafe alarm system: this is an inexpensive alarm system that works over 3G cellular networks.

I find some of the furniture at yard sales and online and other available resources for good deals.

Do a sample calculation (with taxes, some amount of vacancy, cleaning, furniture, etc) and determine what nightly/monthly rate you would need to make a profit.

I live in CO so there's not much we can do but make arrangements to have all of the patio furniture brought in from the balconies. 

You'll still get marks under large pieces of furniture but you can use their pens to fill it in.  

The straw that broke the camels back was when they removed a tenants left behind furniture and charged me $850 to do it without my permission.