I would price yourself lower than the competition since your guests will be dealing with your personal property in the house, but also because you won't have any reviews on Airbnb yet, which could scare away a lot of potential renters.

I just had a tenant leave after 5 years, so recently listed mine for rent, and there is a lot more competition than 5 years ago. 

Of course after renovations are complete I will be going up on rent to be competitive with the going rates.

What can a new investor do to acquire a house in a competitive market? 

Look at how many people these days are into real estate investing or starting website, there is a ton of competition and it's getting just as back as looking for a decent stock to trade.

I've shopped around and their prices are very competitive.

Here are some of my options: Use as additional capital towards flipping.This could possibly allow us to consider some higher priced properties or more extensive renos (which may have less competition?)

There is so much to know, and so many pitfalls for those who have no experience in scale or competition with well-financed operations, it is like running a gauntlet through a field of landmines. 

its all about velocity.and with the competition a good profit these days is in a lot of areas 10 to 20k per deal.so to make any real money you need to be closing 2 to 3 a month on the retail side.you must also prime the pump.. as the time to start to finish is 4 months if your very very goodto 6 to 9 if its a big job... so to get that monthly volume up and running as  a flipper..you need 6 months of inventory before you make a pay day... so that 12 to 18 homes bought and under construction ( this is the guys you know that do 40 a year or more).

Am sure you can do the math, don't think they were fixing and flipping but my point is that auctions get competitive so make sure you know your numbers going in and stick to them.