@Paige Roberts,Caulk and protect the heck out of that place.. as an exterminator told me, if light or water can get through there.. so can the roaches...   

Lower appraisal means better protection for the bank.

Do my own marketing where I need to spend almost $2500 to potentially find a dealAs of right now I'm leaning to #2 but wanted to know how other rehabbers handle these situations?

I'll spend a few minutes to offer some guidance, but the vast majority are time wasters.

And I tell them make sure the rent money is in the bank on the first.Another tenant, slightly better qualifications, missed one electronic payment recently, but tells me he had to help a relative out, and spend $29K.

Both will likely give you flexibility to add any addenda you want, while maintaining a baseline of protection and legality. 

Just know that getting more bids later on may come in lower or higher so account for that...for a first time flip just go ahead and assume you’ll spend more than you think.

Just throwing out an idea here; if you have 300k to spend, and you don't want to deal with the headaches of management, have you considered alternatives to landlording?

If you spend all your money upfront the lessons learned won't matter.  

How would you go about spending that money to market for your first deal?