I definitely prefer this option as the whole point is to get built-in equity.

This is the preferred strategy since it incentivizes your PM company to fill it as quickly as possible so they actually start receiving revenue from your property.

If you prefer less risk and immediate income, then paying cash could be the way to go.I like that- both sides of the coin.  

Additionally, I prefer to receive the termination amount BEFORE the tenant breaks the lease and moves out.

I am so frustrated and saddened this person did such a thing but was told that If I sell the property, which I prefer to do by seller finance, the code enforcement cancels.

Wife and I would prefer the lake house we haven’t bought yet as it checks all the boxes, but might be worth having 2 properties right next to each other. 

Foreclosure auctions are on the table, although least preferred due to the lack of interior access (maybe with more experience).

(I’d prefer you found a way to put down 20% and save the PMI as well as lower mortgage origination costs and on going interest costs.

Use some for buy and hold (I personally would prefer apartments rather than buying a few single family homes) and some for lending/trust deed investing.In either category, you must know what you are doing, know how to vet the investment, how to vet the sponsor (if investing in a larger fund of some sort), the laws and regulations on the lending side, how to investigate which areas to invest in buy and hold and notes/trust deeds for that matter.So as you have already said several times, lots to think about . . . 

100% preference.