What I love about this approach is that the people call me and I pick and choose only the deals I like (and refer my turndowns to my competitors for a piece of the profit). 

Personally I did the debt snowball on all my personal debt before starting my REI.Regardless of what you choose good luck to you.

In this range the rental returns are easily 10-12% all cash, and you have a great working class tenant profile.I personally have one rental that is worth over $250k and while the tenants have been awesome, the turnover has been high.So at the end of the day, just try and pick a goal first, and then choose a strategy from there.

I have two applicants. I like both, have run background checks, and there are no red flags.

Candidate 1: financially a little better off, and I believe will treat the house very well. Due to their family situation ...

If you don't mind me asking-- which strategy did you choose to get started and how did it work out for you ?! 

I think combining both properties on one deed would be beneficial to any exit strategy.I know I came off harsh and apologize to @Shawn Holsapple for that, but it is definitely not a path I would choose. 

do your due diligence and then go for it...whichever way you choose to go will be a winner.  

However, unless you're talking about an FHA or otherwise government insured mortgage, lenders are relatively free to structure their agreements as they choose. 

Either way I choose, he will deduct that from the cost he charges for closing on that property. 

Just choose your comps carefully, allow for differences that affect value &/or desirability, and you should be good.