A 3% increase is a nuisance increase in this economy, I'd bet you're under renting at that pace. 

If you're not expecting this to appreciate (like if that university is decreasing in size or stagnant in its growth) I think this could still be a good deal, I would be willing to bet that you may be able to find something with for a lower ask that may need some love to get it back in shape.

I would bet your getting adequate marketing.

I'm betting the lender asked a lot of questions as you were dealing with a wholesaler and the fact that the wholesaler wrote down the wrong address on the contract would have raised many flags.Even in joking, I don't know why you'd call yourself a slumlord. 

Your best bet would be to talk to a local bank. 

The price you want to pay for a 3/1 or 3/2 is not going to be doable in most parts of town unless the house needs work (realtors who watch the MLS closer may be able to comment better here, I'd bet the southeast part of town has homes near that price).You said you haven't done much research yet, this is one of the hottest markets in the country, you will need knowledgeable people on the ground here to assist you to make this happen.   

Realistically, most families want to either be close to the base, or close to some tourist attraction around, so I bet you would find more success casting your net either at, or between those two things if that's the kind of fish you're trying to catch.

It would be a high interest, but at least keep me safe if the market were to suddenly drop out before I got a chance to refinance into a conventional mortgage.

Do you see rental prices growing in the next few years that this is a good bet (whilst there may not be immediate cash flow)?

Yes, the former choice is much more passive and safe but the latter is more calculated and higher reward in the end because it has a more leverage-able position.