But if I do that, then I won't have the money for the 3.5% down payment.Here are my numbers:Savings: 41kRemaining balance on FHA loan: 38kInterest Rate on FHA loan: 2.75%Market Value of Current Residence: 100kAsking Price range for quads we're willing to live in: 350k-450k (12.25k - 15.75k at 3.5% down)My current thought is to cash out refinance to a conventional loan. 

I can't say whether the mess that happened there recently is a counter-balance to the apparent low local crime rate or not.That's one big problem with investing at a distance.

If you’re willing to pay the mtg balance, then buy it.  

@Bharath DandaAs a newbie investing OOS, you may want to get a second set of eyes on the property outside of the turnkey company...Checks and balances...

Furthermore, as we all know the first few years of mortgage payments are mostly all interest expense and less principal, so my outstanding balance on the debt is remaining roughly the same.

I have zero balance on my loc.

Depends on budget and your threshold for the balance of cashflow VS appreciation. 

Get your personal finances organized into a folder with your tax return and a personal income statement and balance sheet.

If they do exercise their option, the lease contract is terminated and a new owner finance contract begins with monthly payments of $1K/month (same as lease agreement) and a balloon payment for the balance is due on the 24th month. 

There's not enough negotiation going on because the balance is tilted towards the seller.