My play is to build smaller homes (1300-1500 sq ft)(2 bed / 2.5 bath / 1 car garage) with nicer and unique finishes while still undercutting the zip code's pricing (New townhomes are $300k-$450k and I would sell mine $250k-$275k).

I would challenge them to tell you what statute from the state or what underwriting guidelines are forcing that requirement so you can know what they are basing that on.https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B5-Unique-Eligibility-Underwriting-Considerations/Chapter-B5-4-Property-Specific-Products/Section-B5-4-1-General-Reqs-of-Texas-Section-50-a-6-Loans/1736883621/B5-4-1-01-Texas-Section-50-a-6-Loans-12-19-2017.htm 

I've toyed with the idea of selling the rental but the current economy is less than ideal to do so.

There are more unique properties that either have multiple units on one lot, can legally be rented as an AirBnb, and are close to downtown or Old Town.

If I was looking to score a really good yield in the Smokies, I think my strategy right now would be to find a really good, unique place to build. 

@Jason Clark you're in a unique situation as we might be heading into a very interesting phase of the real estate cycle.

That was based on my own unique circumstances.

I’m guessing any CRE position brings unique skill sets to the table, but are there any roles you think are especially valuable?

The low interest rates have a lot more buyers in the market, but as a unique result of covid, not nearly the supply to fuel that demand which is causing prices to increase and homes to sell in under 24 hours.  

As others have said, each situation is unique and whats best for one person may not be for another.