The problem is the rents are just too low compared to what the owner occupants are willing to pay for a home.Other markets there are homes that rent for way more than 1% of the purchase price.

The general plan is fine.You may has issues with the land + log cabin if it is too different from other comparable properties.

Rentals, in broad terms, do not compare to your family home.

You mostly want to be near the top compared to the competition.

What are the risks and how much margin do you need to reward you for taking the risks?

Comparable sales

Whether they win or not, YOU WILL LOSE (due to the legal fees, etc).The risk on this deal is high and your reward is VERY LOW ($5,000 to $10,000).

Is this now not a very average investment perhaps compared to something else?

Little hassle and you make a few buck - go for it.If the deal is messy, not likely to close, will tie up your funds then you need a bigger reward for the risk.Some folks work a year in a job for $30K plus benefits.

Just realize you are getting a small fee compared to if you were doing the deal yourself.