I have been playing with the idea of A cashout refinance ( to make them commercial), but I am also weighing the option of buying using a commercial mortgage now and doing a sale to access equity later.

Option #2 sounds like a long-term play where you may be betting on appreciation in those markets. 

Have your attorney do two things simultaneously: (1) draft a letter to the tenant called "notice of termination and demand to vacate" and (2) file an unlawful detainer suit seeking possession and, if possible, damages. 

I live here in Cleveland and people are flying in from California and New York in droves because the cost of entry here is so inexpensive, but the market is hot and stable with an extremely healthy demand for housing from strong working class population.For $20k here in Cleveland you could pick up a, 3-5 bedroom rehab.

If you already have a good w2 or business to eat and live on, it's a great long-term play, especially for part-timers. 

It would be nice if all listings (via MLS or fsbo) received a fair shake with agents, but true that not all listings are created equal and no doubt implicit bias comes into play for all parties.

If you buy in areas that have good tenant demand, buildings with value add upside potential and don't over pay so you can cash-flow, the risk is lowered. 

If I had to pick one, I would choose the property type that is more in demand in your market for the next 5 years.

What is the demand in that area for sales or rentals? 

They are now clean, according to their Instagram, or Twitter, or whatever.What goes through your mind, and how does it play into your overall evaluation?