Do a thorough research, make sure you understand how the market works and build a solid team from lenders, contractors, PM and realtor.

Are any of your debts on a vehicle you could sell and downgrade while you work through this?

Think New York, San Diego, Los Angeles, etc.The problem with that though is a) You may not be able to afford anything there, or b) If you can afford a downpayment you'll be eating negative cash flow.In short, the highest appreciating markets may cost you too much per month to participate in because they have large negative cash flow.So you need to find a market that balances the two.

I've gone through a couple handymen that overcharged for very poor work so I'm looking for recommendations from people who have actually worked with someone in the area.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

The first option is a much better deal if they can secure financing, but the owner financing portion is too much headache IMO, but could work something out with a good contract. 

I always stress that people decide on the type of life they want and not necessarily "hot" zip codes.

The people who can share those kinds of resources are the people doing the design and drafting work as their profession. 

Turnkey does the work for you and sells it to you priced in.

What locations, property sizes, and target groups work best?