Remember with househacking you usually have higher closing costs and reserve requirements so, you need the downpayment, plus reserves plus closing costs

Doesn't this mean the area isn't ideal for rental investments.

Ideally you've of already visited the areas you're targeting so you have a sense of the vibe of who's renting, what they need/want, where they go, where they work.Now let's pretend everything went smooth, you're either going to work with realtor to get it rented or a PM.

Ideally, I would want to use the money to invest in real estate, but My investment options are more limited than if I had a self-directed IRA.I do not want to invest in stocks.  

If sweat equity is your goal than of course stick with that route but just remember you have to pay taxes insurance utilities and more for every additional day you hold your property.

I choose anyone I deal with in life as a resource that I can also be a resource to also, in life's dealings.There are plenty of  tenants out there that live by the " GOLDEN RULE" also, You just have to try to keep yourself in a financial position where you can afford to be patient.

Every renter has to start somewhere, and most people will have something on their history or situation that isn't ideal, but that's part of the game.The felony is the only "real" issue I see, however I've had dozens of houses with dogs (of all sizes and breeds), and very often those backyards got thrashed. 

Ideally you would shoot for as high as possible 2% being the golden number.If you want to be a investor you will need to spend a few months researching finances, income properties, investing etc.

I realize this business is all about relationships, longevity, grit, ideally fulfillment and am willing to put in the work.

I still remember finding out about this "Lead Certification for Maryland State" a real pain and costly but it keeps people safe we hope .