Personally, I advocate for a long-term investment strategy and would recommend investing the funds, provided you are comfortable with the expected return on investment over time.

Obviously if I intend to have a top performing STR in this market, my buy box will allow for a much higher max purchase price, but I wouldn't feel comfortable with shooting for the max if there aren't clear ways to beat these competing properties.

Start running numbers on potential deals to get more comfortable, and build out your team—like a CPA, property manager, and lenders.

Get out of your comfort zone.

Lenders desperately need/want business especially in this interest rate environment (right now, the main source of mortgage loan business in Florida is rehab financing as a result of the hurricane damages) and one way the big players differentiate themselves is by streamlining the process.

And how much rehab ($ amount or $ of PP) are you comfortable with in your projects?

The question is mostly a personal financial planning question and it depends on your preference and what balance of risk and access you'd like and would be comfortable with.

Additionally, I would like to attempt to do the process Owner/Builder with subcontracting work out as well as doing some of the work I'm comfortable with (I have some experience with bathroom & kitchen remodeling an am not new to the construction industry).

You can be sure they will continue to negotiate for, strategize and advise themselves.If the laws are similar where you are, you should consider if you want someone doing those things for you, and whether you are comfortable going toe-to-toe alone with a licensed professional on a $1.25 million purchase.

A borrower really needs to have at least some "skin in the game" to make lenders feel comfortable.