There are a couple of issues here.
(1). If you want to use output 2 as effects loop rather than as a secondary output, yes, XLR-to-TRS cables from Out 1 are the way to go. Even if you are planning to plug that into a TS input (don't know what you were planning to run this to) I'd still go XLR-to-TRS cables because...they are more useful beyond this singular purpose and shouldn't be any worse than going XLR-to-TS cables.
(2). If you do choose to use output 2 as effects loop, keep in mind that you only have one "OUT2" block on the grid (and only one "IN2" block). Which is to say you REALLY only have 1 loop, though it can be stereo. You could rundown an
@JiveTurkey rabbit hole of trying to figure out how to run one pedal on the left side and another one on the right, and use an expression pedal to pan across to which ever one you want active, but that...is a pain.
The FM3 is a great box IF it does everything you want it do without adding on peripherals (duh -- "its a box that can do what you want if it does what you want!"), but not a great box if you have to start trying to expand beyond it, IMO.