What's concerning is, what else is not covered?

Aside from the increased rental value, properties that are on water, or have a view of the water, are going to appreciate in value at a higher rate than the others.

Also keep in mind as time goes on typically your yield will increase because of the rent growth. 

I am leaning toward removal because the floor is run down, the risk of increased pests or feral cats, and there is already a storage closet off the patio.

If MTR is a good strategy you will further increase your cashflow.

I am looking into my STR options but from what I have learned this is a overflowing market in the area and the vacancy's are increasing so I may look into mid term and long term only.

My terms are identical to yours as far as the 1-year lease with 3 options to renew (for them), 3% yearly rent increase, etc.

@Muriel Hair here's some articles about Detroit increasing over 20% in 2024...https://detroitmi.gov/news/detroit-home-values-increased-ave...https://www.cbsnews.com/detroit/news/detroit-home-prices-amo...https://www.detroitnews.com/story/news/local/detroit-city/20...

I have sold some properties years ago on lease options where the tenant buyers actually exercise their right and purchased the property. ( I was in the deed.)The reason I am concerned to tie another person’s property up  with the lease option is that people can change their mind, as in the seller.  

You haven't seen it, but you know automatically that that you can increase the rent by $25K a year?