In real estate you don't have to do anything, it's really just a matter of how much time you want to spend looking for a loan and how much your willing to pay for that loan.Owner occupied loans will usually be easier and cheaper, but if you find a loan that works for you and it's not owner occupied then go for it.

Then I would still have enough for a down payment on a property in a cheaper market.

So the cost of converting everything to gas will be cheaper initially, it will be far more expensive over the long run.

My brother does contract work and said to avoid the cheaper stuff and go that way. 

Should we ditch our dream and move somewhere cheaper?

If you can find a way to add another bath (or even a half bath), rents for 3/2 units were a bit higher ($1900 and $2100, also not a ton of inventory to look at).I'd expect the stuff on craigslist to be a bit cheaper, but also a bit more run down.

850sf is a small house, but I'm not sure $50k is going to be enough of a budget for this project.Assuming you are flipping the property, if the ARV is only $85k and the repairs are $50k+, you need to get this property for much cheaper than $30k!

This should be cheaper than a construction loan. 

vs 20mil (more $)Glue down (cheaper) vs Interlocking/Floating (more $)The LVP/LVT recommended by you hopefully slip-resistant preferred, waterproof is a must.Any other idea appreciated.

I'm finding SFHs much cheaper about 25 miles away, and the rental rates seem similar.