Form an LLC partnership and purchase the property through the LLC, this way the LLC owns the house. the two of you should sit down with an attorney and spell out an agreement that the two of you feel comfortable with.

Beautiful country, although the RE around there had been quite depressed for the last few years - which spells out a GREAT OPPORTUNITY FOR YOU!

It seems only fair that I receive my ~$3500 back if he backs out as I wouldn't have proceeded without the cancellation letter (clearly spelled out in the contract).  

You should have a contract that spells out exactly the terms of any showings or sales.I just started working for a team on May 1st and we detailed almost all scenarios in our contract.Some are percentage based, if she gives me the leads, to cash at closing if I take out her clients on showings.

The amount, date of payment, number of annual payments and other details are spelled out in the terms & conditions of the agreement between the seller and buyer and then presented to the servicer to facilitate. 

The lease agreement spells out the rents only, separate from the Option contract.  

Spell everything out. 

Is the right move to get started even though the market is so high or wait for a down spell and better chances for profit?

I met with a securities attorney a few years ago and had this spelled out for me.  

If you do sign up for a 5 year lease make sure you have automatic rent increases in it ahead of time spelled out in the lease.