If #2 is in a more convenient location, closer to stores and activities, then why is it also the location with unpaved road and some dilapidated houses? I’m trying to picture this situation since usually you would expect to find unpaved roads and dilapidated houses farther out from civilization. Is it near the most development and an up-and-coming area, and yet somehow older owners kept this pocket of land from being developed? Or does it just happen to be closer to a strip mall with one grocery store and one taekwondo place? Is #2 closer to where your kids would go to school? Can you safely walk to any nice restaurants and shops from #2?

#1. The quality of the neighborhood is very important to how well you'll enjoy the environment, and to eventual resale.

And, building from scratch is not for the faint-hearted. Beyond trying to envision something from paper plans, which may not end up being what you imagined, you'll be dealing with all the uncertainties associated with building - builder reliability and quality, timelines which may be optimistic, the need to spec out every single detail from flooring to door hardware, to tiles, backsplashes, etc., etc, ad nauseum, which is time consuming and can be stressful. Someone else already mentioned the septic system. Avoid septic and well water if at all possible. It's bad for resale, exposes you to risks of those systems failing for a variety of reasons, and you'll have maintenance requirements you can avoid with public water and sewer connections.

A 10-minute commute for one of you would be nice, but the trade-offs to acquire it involve plenty of risk and the potential for less satisfaction in other aspects of the property in the long run.