There is a mix of long-standing residents and young families. 

One who represents themselves in court has a fool for a client.When newbies try to out fox long standing rules, regulations and laws, business structure requirements and prudent practices, they will screw up. 

It is on a very flat lot and has a problem with water standing around the foundation, and under the house.  

Lots of people stick their heads in the ground so get a good script in your repertoire to get them to trust you and make yourself stand out.Also welcome to the site!

You should take whatever advice you get for free online with a grain and remember that none of is will stand next to you in court if you get caught doing something illegal.

I agree with those in the more cautious side, a problem in your situation is it seems now you are being watched and set under a magnifying glass, the way I look at it to always keep integrity in your Job, so you appear blameless so if things do arise where you would be encroached upon you have more than your legs to stand on!...

If they are looking at several properties you want yours to stand out.

Commercial property / 5 unit+ properties can stand on their own better than residential.  

So my question stands...Would you dedicate the entire 34k to a down payment on the SFH and build equity until I can save the 20% down on an invest?

If you can't stand your job for some reason, find another job, possibly real estate or construction related.