With my initial units, I find getting quality tenants is an issue and I typically have higher turnover than I want (my units are all duplex houses).  

My initial area of interest and focus will be 2-4plex buy and hold, likely house hacking the first one.

@Anthony RussellThere is also a math/tax problem with this logic that most people overlook when they look at the 401k participant loan as cheap and easy money.You put the money into the plan on a tax-deferred basis.You borrow the money from the plan and pay the plan interest in the range of 4-5%.So far, so good.Your payments to the plan are made with after-tax dollars, thus eliminating the initial deferral benefit.  

Option two is the least expensive initially but carries a higher degree of risk.

Really, that's what the landlord should have offered you initially.

The buyers had dropped their offer down to $197 based on an appraisal that came in at 190k (the exact thing that we were drying to avoid by writing an exception into our initial counter offer).

I am just getting started learning how to analyze deals, but in my initial research, it looks like getting positive cash flow in my neck of the woods is going to be difficult. 

For example, I almost always tear out carpet and replace with tile or trafficmaster, so my flooring costs are often higher than other landlords (at least initially).  

Construction type is "steel house", which means steel studs with shed type enclosing, and I understood that the sellers built the house themselves, probably with one of those pre-engineered kits, which may explain the initial N/A (not applicable) in the oldest sales history entry.

@Sean FrickI just had some initial thoughts after reading your situation.