At this point in my life, I really want no debt and cash flow is my primary desire. 

Until supply increases - sellers will be in complete control especially in affordable/desirable markets.

I'm caught between this idea that the market is too hot and overvalued at present and the desire to just hurry and get started but I'm afraid I'll pay too high because of FOMO. 

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Between us both still working full time, our 401ks, my 2 pensions, a primary residence 4 years away from paid off, social security, wife’s government pension, her 401, & working full time, with kids out of college & college paid off, we have mutual desire for owning lakefront log cabin.

School districts can play into the desirability for renting so pay close attention when doing your due diligence.  

the area is a desirable area, and not in a park. 

Find out what his needs and desires truly are.

Another consideration is that the renter pool is not as desirable during the winter and your rents may also be slightly lower as a result.

Only way I can get to a $29 principle payment and $1,660/month is with a $140K loan at 14%  Refi is desireable if these are his terms, but I'm skeptical that this is correct.