Buying a less expensive home in cash vs $90-100k home with loan

[Kathy C.]

Home #1

$35000, Tax + Insurance appx $140 Month. Currently rented for $500 Month to Month. Typical rent is higher for the area at $650-725 for a two bedroom.

Home #2 (Looking at several similar properties)

$95000 , Tax + Insurance appx $170 Month. 20% down. 3 bedrooms, 2 Bathrooms. Typical rent for the area is $1050-1100 for a quick turnaround.

I can't seem to decide what the best option would be. Going with a home similar to #2 would allow me to purchase more properties quicker. Less money down, more money saved up for another home. Home #1 would eat up most of the money I have set aside for a down payment. Yet, it will allow me to own the home right from the start . Which would you choose and why?

Thanks!