3) Stomach, Balls & Gut: With growth comes pressure...and balls...and a gut feeling. 

If you have the stomach for buying a property that needs some(much) attentive care and the patience to deal with a changing environment you might find some nice long-term wealth investing in these cities.

what they tell me is that they wrote off a ton of bad debt on the overly leveraged SFHs in the past and simply don't have the stomach for it anymore.

Assuming you can stomach a little more negative cash-flow I'd go that way.

I felt a punch me in my stomach and I couldn’t even fight back!

I think a "learning through osmosis" process is better at these younger ages.My kids have been paid with full stomachs and a roof over their heads. 

I feel like i have done my research and can stomach any risk that come along with this type of risky investment with the exception of losing me entire 600k investment.

Most people aren't in the same financial situations... some can stomach losing 5K, some 500K, some 5 million, etc.

Two additional way to look at it:- The tenants are the ones paying down that debt so that may be an easier way to stomach the interest amount. - If you make additional payments on top of your slated mortgage amount you can pay it down faster, thus paying less interest in the long run.

If you have the stomach for it and the property checks out go for a second with a high interest rate and points.