I did a similar thing, instead of a GC, I was an engineer  already in the land development environment and put together my own group to purchase land, entitle, develop, etc. 

Then, I searched for new or almost new gated Townhomes and finally paid Cash for a 1500 3/1 with garage and pool, in a 17 unit community with low HOA in Valrico on the North side of Hwy 60 for peace and quiet and safety while I travel.

CO landlords can still evict for all of the common grounds for eviction: nonpayment of rent, violation of lease terms, damage to property, disturbing the peace, health and safety violations, illegal activities etc. and can also still evict if they plan to conduct repairs or renovations, property demo or conversion, move in to the unit themselves or have a family member move in, withdraw the property from the rental market, or if the tenant refuses to sign a new lease with reasonable terms. 

I love that you rented two of your bedrooms as mid term and short term rentals and made enough to pay for the mortgage and now you are going to use the rental income to show you can qualify for another property.This is an excellent strategy and one more people should consider doing in this inflationary environment to offset the biggest cost in their budget--housing.As you rightly point out, you can use this strategy with every house you buy accumulating a portfolio of houses that you originally started out living in as a primary residence every two years.Well done and more people should consider doing the same, or rent their garage, or shed, or a boat, or an extra car.Love it!

Peace & BlessingsRay

In my opinion Option 1 could be a bit risky in today's environment as we are not sure if prices have hit the bottom yet, there are positive signs in the CoS market that point to price appreciation in the future, but there is a good chance the interest rates are not coming down for a while, which will have a negative impact on home values. 

.- I've been on the sidelines with this weird high interest rate and volatile environment for about two years now.

Peace & BlessingsRay

You can serve a "notice to cure" which gives the tenant a specific timeframe (usually 14 days) to fix the violation (in this case, not properly maintaining cleanliness or disrupting the peace).

In my area the sheriff is there to remove the person and keep the peace .