I tried the rental process with my old house, it didn't work out well. I'm no expert at the rental biz. Building and selling would be my choice. I helped a friend do his small 7 lot subdivision around 2007. He already owned the land, got it through approvals cheaply, built a dirt road for little money. He had a selection of low priced contractors to build the entry level houses. Started a new house after each spec house sold so he kept his max loan amount low at any given time.

If you have a few acres to work with, I wouldn't ignore the subdivision option. If you invest the price of a lot you could have a half dozen or more lots to work with. You can sell lots to buyers who want to build later, sell home packages, sell spec homes, sell lots to builders who need inventory.

Tax wise, it is beneficial to buy and hold the land in one land holding company for a year or more to get long term gains treatment on the land profit. Your home construction operation should be a separate company because selling lots/homes classifies the business as a dealer and dealers don't get long-term gains treatment, taxes are treated like regular income. Your land holding company can sell and finance the whole subdivision to your home construction business in order to get long term gains treatment on the land portion (worthwhile if the value of your lots greatly appreciates as a result of subdivision). I did this and saved about 15%-20% of the taxes I would have owed had I done it all in one company.

If you do decide to rent... don't rent to niggers. Had a neighbor and she used to rent to niggers and it was endless headaches and not worth it.