There's no magic bullet in real estate. 

There are so many companies out there looking for ways to get realtors to buy the "magic" bullet. 3.

I thought Forbes did a nice job on this article over the weekend and wanted to share it here on Bigger Pockets because it seems to capture some big ideas that may take a lot of digging to find otherwise and lays them out in bullet point fashion.  

I'd  bite the bullet and fix it up.

But you have to replace all the support bars, and that may not make economical sense for you if just redoing the sheetrock doesn't make sense.My experience has been that if you're going to hold on to the property it usually makes the most sense to just bite the bullet on the front end and restore it to a normal sheetrock ceiling.

They would be dodging bullets (litterally).                

I had never really needed to know anything other then that, until now.Before I started the demo, I did some light homework on how things were done back in the 20s, but without knowing which I would find of the framing options, I just hit the bullet points on each, until I knew which one I would find.The first thing the owner/investor asked was " is that safe" referring to the wall studs going from basement to roof, without much between.

Helens OR I think this has some merit in your areas were new construction cost out strip what rents will garner plus these are literally bullet proof  :)maybe you grab some dirt there that is not too expensive and set these up maybe like a little MHP type thing.. his 8 plex I believe he is stacking them.. very common in Denmark they stack them 10 high.Also I have been picking up lots in Richmond CA  ( formerly and presently the hood) with ideas of putting these on the skinny lots.

Would it be better to bite the bullet and spend the $35k (will be using conventional loan)  up front as a down payment and have a home that could potentially be a rental when I move out in 3-4years or rent and pay someone else that $35k in rent over the course of the next few years.

See below bullet 3. https://www.irs.gov/irm/part55.12.5.2.7 (06-07-2016)Amount Necessary to Redeem Property In any case in which the United States redeems real property under 28 USC 2410 or IRC 7425, the amount to be paid for the redemption is the sum of allthe following: The actual amount paid by the purchaser at such saleInterest on the amount paid by the purchaser calculated at 6 percent per annum from the date of such sale until the anticipated redemption dateIf applicable, the amount of a payment made by the purchaser (or successor in interest) after the foreclosure sale to a holder of a lien senior to that foreclosedIf applicable, the amount equal to the expenses necessarily incurred in connection with such property after the sale but before redemption MINUS the income from such property and MINUS a reasonable rental value of such property (to the extent such property was used or allowed to be used by the purchaser)