Industrial property with several thousand square feet of vacant space that could be used for development. 

Find funding, buy a deeply discounted property, resell it to a rehabber.Again, wholesaling is legal in all states because you own the property. keep in mind though in Oregon if your not owner occupying it.. and you intend to resell.. you ALSO need a developers licenseyou need a bond and insurance... so again cant make these blanket statements yes it legal to buy and resell but you do have to have those licenses to do that... 

If that is the best route to take, do I turn around and buy a third property with the extra cash?

Could park those on the open ground, but no climate control...also a big thing for people with extra $$$ to spend storing forever.Know thy customer!

There has been so much development  in the past that it has really messed up the drainage in the Houston area, it doesn’t take a lot of rain to get the loacal bayous and water ways to break over their bank.

I don't think it would be easy to add on an extra "expense" like that and expect your tenants to pay it.

I own a rental property (a single family house) on a street where they're building a large "HUD 221(d)(4)" multifamily housing development across the street from the house. 

But maybe you get an extra 5-10k on the HELOC which allows you to get in on another deal.

I suggest you develop a fairly detailed scope of responsibilities for that PM, including how often you expect him to be there and exactly what kind of interactions, inspections, reporting and other activities & responsibilities you expect of him. 

Best of luck and keep us posted if something develops!