The goal is to have paid off properties to pay my parents extra income in retirement. 

I cannot see how build two, say, 1200 sq ft houses with two roofs, two foundations, presumable about 25-30% more windows and siding is going to be cheaper a duplex that might have a little extra fireblocking and soundproofing.Now, maybe your GC is thinking that detached homes tend to get higher rent than comparably sized and finished duplexes.  

If it brings enough to cover taxes, interest, legal fees and auction expenses, plus some extra, the people with redemption rights share the "extra." 

Make extra money for flight school is good, but if you need extra money for flight school that tells me that you don't have a ton to invest into real estate right now.

The extra cash will help because it shows that you have reserves, but you wont automatically get a sweetheart deal just because you have X amount of cash. 

I feel I can get similar rent for an oversized 2 bedroom with a finished office and storage room on the 3rd floor as I could with an extra bedroom.

Or their own file format, which opens their own software.I think I would have to pay extra for outgoing, however, over a certain number of outgoing faxes.

If they put up any sort of resistance, that could be a cue to start digging a little deeper and documenting a bit more thoroughly (hence the doorbell camera coverage tip I put first - installing the cameras right away and then having the new lease conversation with the tenants afterward is very easy to frame as "I'm just a new owner putting some TLC into the property and doing my due diligence on the leases/tenants"; talking to your residents first, finding out they have extra people living there who aren't on the lease, and then installing cameras around the property could set you up for a very adversarial relationship with your inherited tenants). 

This would give us about an extra $14K a year today to invest and as our income grows so will that number.

If there was a substantial amount of extra work needed, however, I could easily see how it could get up to $3,000 or even more.