Sometimes keeping a good tenant at a slightly lower rent is the better return.

Only sell a note if you can get a higher return on that money.

. - Closing costs are likely to be higher- DSCR loans cannot be used for distressed properties; it looks like you have the order reversed; you will need to rehab the property first, then get a DSCR loan afterFinally, the returns in rental real estate are not solely from the monthly cashflow.

I would pick the prime location with the lower returns.  

Would also like to know general returns between the two given comparable risk levels.  

I can build cheaper than buying similar, no unknown issues as I perform most of the work, and have 12%-16% CoC returns a year after completion.

Additionally, OTC deals might provide access to properties that others have overlooked, potentially increasing your returns.

I'm currently based in Yokosuka, Japan, serving at CFAY (Commander, Fleet Activities Yokosuka) in the US Navy, but I'm planning to return to the US to expand my real estate journey.

And, if a higher return is offered with moderate risk, don't believe it.

Cap Rates & Returns • Class B/C multifamily typically trades ~4.9–5.4% cap rates, which is competitive for steady cash flow. • Operators like Morgan Properties just made a $500M+ Midwest acquisition, betting on Indy’s supply/demand imbalance.