My personal DTI is too high.

I would highly just consider getting your RE License and conduct transactions legally and through a broker, it will alleviate all of this mess. 

Additionally, my debt-to-income ratio is high.

Obviously mounted up high in a readily visible spot "trail cams" work just as well (as a possible visual deterrent), very cheap online. 

High construction costs and interest rates?  

Plus, when done correctly, you as the KP can capture the ALL the Fed investment Tax Credits (ITC) plus the  State, MARCS, and Cost Seg Depreciation to massively offset your High W2 / 1099 Income - I wrote a book specifically for people like you and your wife to address your concerns. 

Since I’ve increased my deal flow to a significant degree, I find that this technique eliminates the wasted time and effort of dealing with people who aren’t highly motivated to close a transaction.  

For my own portfolio diversification I want investments on the risk spectrum, some high risk, some medium risk, many low risk.  

- Are there certain areas you would stay away from and why (eg, high crime, bad schools, poor quality builds, etc)?

A Stanford study revealed that over 75% of the ADUs built in San Jose between 2016 and 2020 did not have a permit and are therefore illegal housing units.The lengthy permitting process, high construction costs, and shortage of tradespeople are some of the factors motivating property owners and contractors to take on the risk of building, renting to tenants, and/or housing family & friends in an illegal unit.