I would not use "sub2" for buy and hold.I would use sub2 for buy, fix and resell. 

Interested in using the allowance toward building equity instead of leasing, that I will either (a) feel reasonably comfortable reselling without taking a loss in 2 years, or (b) turning into a rental with a PM that would generate reasonable returns.I'll be commuting from our home in Indiana, so I'll be only occupying ~4 days/week.  

So, if your local lender plans to resell the loan on the secondary market, you'll be stuck. 

NEVER pay cash when the asset is not immediately re-sellable for more than you are paying.  

Flipping PropertiesIf the primary objective of your real estate business, or one of your real estate businesses, is to buy, potentially fix up an existing property and resell it within one year, the Internal Revenue Service can consider that to be an active trade or business.

Then send these out to my customers with offers and for those who agree, I guess I just take the purchase agreement to a title company to get the property transferred to me.Can anyone help me out here by pointing out steps I need to take to protect myself and how to go from offer to close and property transfer of ownership to me so I can go and resell the property?

I think you can get it in working order for far less than you could lose by reselling.

I think they will charge you about $0.20/lead where resellers will charge $0.14.  

If it was me, I'd close and resell as is.

AB-BC closings... you actually close the deal using transactional funding and resell the property to the end buyer in the same day...