Ive actually not anywhere here described what illegal flipping is other than to point out the time period where it was happening pervasively (late 90s, early 2000s) and to mention that fraud was involved, and to point out how HUD uses the term flipping is different than the colloquial term many of us use for rehabbing a property and selling it. 

What types do you suggest for the area will provide the best return over a long period?

NOTE: The holding period cannot be for the end buyer to get his ducks in a row and get fully approved.

Even if they did, like the previous poster said the interest rate would be in the 6-10% rangeNote that the seasoning period is usually 2 years in commercial, so if you did a rehab you would be able to refi at 80% of your cost (purchase plus rehab) and not on the new appraisalAs far as your numbers, I have a property just like this so I am using those numbersvacancy is goodwater is low with that size unit.  

Hard money lenders usually loan for 6-12 month periods, so they aren't good for rentals.  

@Avi Garg, @Michael Wentzel is currently managing properties while he is overseas for long periods of time, 6+ months.  

Under a lease option, you are leasing the property for that period of time and then have the option to purchase it at an agreed upon price.

You're right, it's usually pretty helpful, except after longer periods, and if I'm doing something that bugs him or he wants.  

If you plan on owner occupying you will get to participate in the first look period.

In a period of historically low cap rates.