If the foreclosing lender is a private investor, there's a chance of doing a lease option based on what their objectives are.

My overall objective is to have my own space (I have a toddler), while also getting into real estate investing. 

You are MUCH better off getting 10 units that have total returns of $1000/mo ... quality over quantity.

South Lake Tahoe recently passed a ballot measure essentially banning most short term rentals.https://www.rgj.com/story/money/business/2018/12/06/most-airbnb-vacation-home-rentals-banned-south-lake-tahoe/2233124002/ And Laguna Beach just did the same thing:https://www.latimes.com/socal/daily-pilot/news/tn-dpt-me-lb-council-20190505-story.html“We don’t want commercial ‘touristification’ in our residential neighborhood,” said resident Charlotte Masarik.Ok, well that’s not Arizona… but rumblings of similar complaints are happening in Flagstaff as well:https://azdailysun.com/news/local/airbnb-a-boon-for-owners-headache-for-neighbors/article_1abd0fbb-83ee-54d6-96c3-cd753349094f.htmlAnd Phoenix too:https://www.azcentral.com/story/news/local/phoenix/2018/11/30/airbnb-rental-home-closes-shop-after-neighbors-ban-vacation-rentals/2025777002/So let's take a look at what laws regulating short term rentals are already in place.Current Arizona LegislationIn 2017, a law was passed declaring that cities, towns and counties cannot place any restrictions on short-term rental properties just because the property is not classified as a hotel. https://azdailysun.com/news/local/despite-local-objections-new-year-s-laws-include-airbnb-expansion/article_52d485d5-79cd-567f-943c-bff142e9493c.htmlThis law specifically targeted any municipalities that were trying to restrict Airbnb and other online lodging marketplaces from operating in the area.

Thus the checklist is invaluable to provide an OBJECTIVE system to analyze applicants.

Then when the Fed started raising rates earlier this year Wall Street had other shiny objects to chase and all but shut its HML support down again.

I wasn't even aware of few things that were mentioned in this thread.Based on the responses, I have narrowed it down to following possible options, based on my objectives and preferencesOPTION 1: Invest in a MF in outlying areas of bay area such as Central valley, Gilroy/Morgan Hill or Sacramento. 

The reason being that the end buyer with an assignment would see your profit (the assignment fee) and might object to paying a large amount, so I avoid the risk by doing a double closing instead.

The lawyer engaged should understand your specific real estate investment endeavor... including who among the potential future members will bring true value to the relationship (and in what quantity), what may go wrong, and how to unwind it all.

That's a great start, it's important to have a focused objective especially when you're just getting into this business.