It sounds like you are already aware of that Harris County has Flood insurance rates have been increasing and due to the "Homeowner Flood Insurance Affordability Act of 2014"  the subsidies are being fazed out.  

To me any city where a person who makes $75,000 per year can't afford to buy a home is not on my list of best places to live.

Then you just have the labor and overhead as differences, and that will tell you which is actually more affordable. 

I might actually be able to afford the rehab without the 203k.

This will help any renter with living cost to afford the rental unit.  

I want to add a few high end properties that I would not afford without the income from those properties, and I have not been able to find any lender willing to look at future income from vacation rentals.

Yes, owning affordable/low income housing is more challenging than your typical A or B class property, you will experience more repairs, turnover and maintenance. 

The developer was applying for local funds to facilitate the creation of affordable housing.  

A few examples of people who seem to have good strategies for a market in flux: Show 2 with Karen Rittenhouse on “subject-to” deals, which seems like an excellent strategy in a market where homeowners may have just lost their jobs and can’t afford their mortgage, but want to stay in their houseShow 19 with Tracy Royce, discussing short sale strategies in great detail.

I don't really know about financing, I tried to get a equity loan for a property,  that I couldn't afford, I had the first two houses all paid and tried to get a loan for a third one that I liked in a very good area of town.