Also, you may charge a premium on the rent (higher rent) in this model of leasing.If you charge them a higher upfront option fee, it will demonstrate that the buyer is committed reduce the likelihood of default.

I do it for a living and finance about 200 of them a year for other flippers this is why i have a pretty deep understanding of distressed assets and the taking advantage of those that might no realize they are paying 3X what a property is worth.. if your paying market price or maybe 10% higher for the owner finance i get that I do that and agree with that thought process..

CoC just about breaks even if I assume rents are on the higher end of the spectrum. 

You would likely get higher daily rates by renting out the 3 BR. 

Again, have to be self employed to do this AND rates are higher on these loans.You will be able to add back your paper losses on your rental business by your lender using this form (if they are competent which not all when it comes to investment real estate) :  https://content.enactmi.com/documents/calculators/Form1038.C... 

@Sonja Revells Real estate investing can be seen as higher-risk by lenders and Dun & Bradstreet (D&B), potentially impacting your credit terms.

For higher yields, buying into short-term rentals in popular areas could be lucrative.

The expectation should be for higher returns to compensate for the illiquidity, but it's part of the deal. 

I have 11% taxes and they charge their fees on taxes also so my effective rate is higher since I don’t keep the taxes but pay the fees on them.  

A deal that produced a 25% net IRR to investors with a 1% acquisition fee, 1% asset management fee, simply pref + single tier waterfall, etc, may only produce a 15% net IRR under the current fee and carry structure, if their acq fee went to 3%, pref went down, they now have a GP catchup and multi-tier waterfall giving them higher splits for higher returns, etc.