(there are plenty of articles/resources online on how to winterize a house)--but, at bare minimum, the heat must remain ON . 

There done, this is an extinction level event for discount/flat-fee brokers because there discounted system was reliant on an ocean of ready buyers/buyer agents bringing buyers because that's literally how they could be discount, they just listed on MLS, did the bare minimum. 

I think the second option makes more sense in the long run but is it smart to do when we can barely cover the debt we have now?

That and a cash offer that I just barely edged out. 

I do take chances on barely qualified Tenants sometimes, to let them get back on their feet, single moms etc......Sec.8 Tenants won't have my compassion. 

If they cannot be paid net 30 or net 15 bare minimum take a hike.Owners: If they walk, talk and act like a slumlord, they are.

Bare minimum for me is $20,000 after a flip (before IRS taxes). 

Scenario 2: An investor owns two rental properties like the one above, but with only 40% equity in each (increasing slowly due to 30 year mortgages), and is currently barely breaking even.  

You as the buyer bare the responsibility. 

Actually, it's been tried and barely made a dent in the market.