My initial setup was so poorly managed that the IRS sent me a ‘late fee’ for $2k; so being remote you need a good lawyer and Cpa. 

I would caution you on the two big companies I have funded a few folks that bought through them and they have all been poor properties for too much money..I can't think of a risker thing to do than out of state flipping for the smaller investor. you need to have someone on the ground that you know VERY well and trust.. and you are going to have a hard time finding that person on the internet or reading a book on how to do it.. theories are great .. reality is way different..

A few weeks ago I listened to Rich Dad, Poor Dad during very long drive from Denver back home to graduate.

It also depends on what your desired ROI is - as long as you run realistic numbers before making any decisions, it seems that either course of action can work for you.

IF the offer gets accepted THEN i'll go out to the property, until then I have not left my office chair.If I happen to find a deal myself that I do not want to buy I'll go to buyers who are local here and can make decisions fast, and can close fast.

After studying this business for some months now, I have concluded that it is an easy business to run poorly or well... and a very complicated business to run for max revenue.  

You don't have to do this but it can help with your decision to buy or not if you know you can do this in the future.

I recently lost a deal to another investor despite being in touch with the decision maker and having a tentative date set to tour the property.My approach this past year has been very direct to the point.

Also, we would not need to add any new stairs if we go with Option 2.Can anyone think of any issues that might help us reach a decision (e.g., zoning, taxes, etc.)?  

This situation may related to the poor regulation or rules.