A DSCR of 1.0 or higher is generally considered to be sufficient to meet debt obligations, although some lenders may require a higher DSCR.

I am leaning toward number 1, but want to know if there is a clear upside or downside to these choices that I am not seeing. 

Randy  I dont think most folks realize the points our making  I have had 3 attempted suicides in homes i bought at auction or pre auction one successful and that was a vietnam vet who I let live there rent free for almost a year I would talk to him twice a month asking him to please move on we cant let this go on.. finally we had no choice but to do a FED and he still would not more when the cops came to escort him out.. ( and my secretary was there ) they opened the door took a look at what was on the kitchen table told my staff person to go get in her car.. found in him the back yard suicide by gun.. there is a very grimy side to foreclosure bizz.. but I 1000% agree with you.. that the homeowner if its an owner occ deal is going to be extemely emotional irrational violent etc etc. this business is not really a beginner business..

That desperation leaves me no choice, really.

I am a firm believer that the property should be self sufficient.

With a 2-4 unit you do have the alternative of a residential investment property loan but a commercial lender can and will do a commercial loan for a 2-4 unit Though the terms aren't as sweet, if you don't have sufficient w-2 income or DTI is too high a commercial loan might be a more available option.

At that point, I have to choices, I can rent the property out or sell it.

@Landon King Maybe Tellus is your better choice.

This is totally your personal choice.

You really have 3 choices as I see it:1.