I am a RE agent, investor and developer in central Houston, feel free to reach out with further questions or if you need help finding land that works with your numbers. - Chris Kersey 

Craigslist always will develop some leads plus it is free.

I actually partner with investors on deals just like this so if you are interested feel free to reach out!

@Patrick Goswitz  Assuming you're comfortable with the buyer, and you own the property free and clear, a lot comes down to what are you going to do with the 100k?

Feel free to reach out with future questions. - Chris Kersey 

But one good thing about keeping it as an STR it qualifies you as RE professional and would be able to deduct from your W2 income.LTR is much more hands off especially if it is a new build.

On the other hand, hard money lenders can be more flexible with down payments and its about 10-15%, this frees up your capital for renovations.

It'll be tough to get into a pure investment in your area for 35k but here are a few options:- partner on the second deal- if the numbers make sense and you could get more cashflow then you could look at a higher price point but my guess is this will be difficult to find- Buy your first property as planned, and save the 35k as reserves and/or just keep it for the next down payment on another FHA after a year- find a place that needs some work where you can use that money to fix up and force appreciation to the propertyPersonally, I would look at those last 2 options where you have the cash on hand ready to deploy for the next down payment or rehab costs if needed.

We can all agree that it is certainly not a risk-free strategy. 

It may be easier to utilitize a kitchen cabinet or buy a free-standing cabinet you can keep in the main living space.