The more complicated answer is if you do quitclaim the property you will be in breach of the mortgage agreement in the bank May exercise the due on sale clause.The third scenario would be to buy commercial property using commercial lending any such instance buying and financing for an entity is quite common practice.So, coming back to the beginning of this answer it's all about the type of investment you're looking to do and the risk involved in doing so.I do want to share my two cents on the matter.

And go through the same exercise.

I was only using this property as a practice exercise and did not plan to actually purchase it.

With lease option give yourself at least 9-18 months to do the rehab and find tenants, to get the property cash flowing so that putting traditional financing on it would be that much easier, before you have to exercise your option (and gives you time to get past the current external market issues.) 

Unless you have access to off-market deals, please exercise patience and prudence.

I'd rather request you exercise your Nostredamus like powers to share what the next PowerBall numbers will be please? 

It's an intellectual exercise with little practical application. 

If you decided to go with 20% to avoid PMI or when you move out yourself cashflow would only get better of course.Now I have no reason to sell you on this place, just went through that exercise to show that with how low these interest rates are some of these 3/4 units with a higher purchase price can still cash flow. 

If they no longer want to exercise the option after the 3 year period then I would keep the option payment?

But, with a Conventional, would I need to still exercise a 1-year residence of the property?