Where should we be focusing our efforts?

Worked with Credit Consultant to increase score for better rate and loan terms.

Additionally, the rental market in Seattle can be competitive, with seasonal fluctuations affecting short-term rental demand.

What's a fair amount, well that depends on what this is actually costing you in terms of actual expenses plus the time and hassle involved.

The rest will be leased.How do I determine and analyze a potential location for this development in terms of potential lease rates, vacancy rates, potential area growth, post construction value, etc?

My goal is long term.

That will help determine if Short term capital gain (ordinary income) or Longterm capital gains.  

Which one (usually, and I understand it's not simple) has a better resale and long-term potential?

Fannie/Freddie have more restrictions in terms of experience and net worth to qualify.

It will also depend on your goals short and long term and why you're investing.