Thomas S. is right that when your money is locked in as equity it is doing next to no good.Whether it is apartments, SFRs, or 2-4 units, you will need to start sinking some sweat into them.

If buy and hold and you're handy then look for something you can put sweat equity into.

Personally, assuming both properties are in a decent rentable area, I would go with deal #1, because of sweat equity.

And having said this, however, it's time to realize that while Scott would have you focus on skipping starbucks (which I concur with), and tightening your belt in every other way, my advice to you is - don't sweat all that small stuff.

For instance, if you give yourself $30K in sweat equity, essentially, the investor started with $50K before the investment, and it devalued to $43K immediately upon contributing.  

So I figured the best way for me to do that is find a fixer upper that I can do sweat equity on the property, in other words I need a fixer upper that will be less then $75,000 and it needs to be 201k qualified in order to fix it which means FHA will have to do an inspection on the property to see it is in livable condition (yes I need to live in it as well).

I purchased my primary residence 4 years ago and have built roughly $30,000 of equity with $5,000 cash, some sweat equity from my father in law and myself, and a modest amount of appreciation. 

If you refi just what you owe right now and not pull out any sweat equity you have, you might be able to get a to break even.2.

That includes no"sweat equity", no management fee, no direct benefit of any kind.David J Dachtera"Success is not a destination.

I have a follow up question to the avg per sq ft rule...I am considering doing more sweat equity on the demo side.