Before I get too far down the road with this, I'd appreciate any feedback on possible issues with Option 2 or alternative solutions.

One option you could also consider is looking for off-market deals, this could eliminate the urgency and you'll most likely find better deals as well.

I don't think there is a do not mail list option for anyone in reality.

Or does the option of selling and getting that capital gains exemption outweigh the liability benefit of the LLC? 

If you cannot find a source for this money another option is to bootstrap it.

Would building a fourplex from scratch yield favorable returns when evaluated against existing property options?

To get it at short sale, the seller going through the foreclosure would have to be convinced it is the more favorable option pretty soon and choose to sell at a lose than risk the consequences of foreclosure.

I'm trying to sort out my options and make the next best move now, or within a few years.

Even had I abstained from voting, that option received majority votes.

Might be a good option if you’re looking into difference avenues than traditional financing