I've got a deep discount on a truly passive STR.I've got a lead on a deal that can be purchased almost $100k under list price given the circumstances.

Discount manager = discount services. 

I would not do the work without either a contract to do the work or some type of interest in the property whether it be through some type of novation agreement, contract for deed or straight sale to you.

They then informed me that I could either move forward with the management services, with a nominal discount of $110 for the error, or revert to the Lease Only Option and have the lease transferred to me without any security deposit, as none was collected by the property manager.This mistake has left me in a difficult position.

@Sook Kim thank you for setting the record straight, I should have caught this when it was posted.

I purchase the home at a substantial discount.

It's like working for free or at a discount and hope that you make money.

Unlike some people, I believe HOA is good costodian often finances, get volume discounts, do the effort of hiring contractors and maintain common space so in that regard I consider them a value. 

It it is just a straight loan (not fix and flip etc) then it boils down to underwriting and application time whereas a private/HML can close in 7-14 days or faster and a traditional bank will take up to 45 days.

they are usually pretty straight forward to work with.