If I default and they get say a $500K deficiency judgement they could garnish my wages, attach my bank accounts, etc. 

Given that, I would say A is probably your best option to get the best of both worlds. 

I would say a maximum of 25% of our acquisitions in the past year were on the MLS, and most of those were HUD properties.  

I would say a firm but respectful discussion is needed.If you are adamant  about no pets.Ask a lawyer to write up a letter informing the tenant that you will pursue legal actions based on breach of contract.

I have thought about making it a few different waysflat interest rate annually (basically a CD, look at CD rates from banks and give them a point or 2 higher)Success based profit sharing ( as deals are close they get a portion of the month cash flow of the rentals) Line of credit ( money that can be used on demand, rates will be higher than option 1 but still competitive) When a bank appraises a multi-tenant property to determine cashout refi amount (for this example lets say a 4 plex) what are they using to determine the value. 

I'd say a high interest savings like Ally 1% or so is better than nothing, I wouldn't go into the stock market with a time frame that short, others may suggest private lending but that may a bit advanced or unrealistic for someone just starting.

However, since I've never tried it before, it seems a bit strange to me that I could tell the listing broker that I'll give the owner $10 (or some insignificant amount) + a bunch of contingencies for me to get the property properly zoned, approved, financed set-up and/or investors within a certain time frame, etc. without them turning down the offer as silly and tarnishing my reputation.If, say, a lot was advertised for somewhere around $140k, wouldn't I have to at least make some kind of "earnest" money option of 5% or ?

This may be the best quote but it's hard to say as you don't say where the property is located and/or what the market value is in replacement cost.

@Cailyn C.This depends on the property type as well, but let's say a SFR for arguments sake.Lender paid at 3.250% is my current rate. 

The equity down payment should not be an issue at that time since the A loan will be based on the appraised value after one year with a CFD.Earlier I said to get an appriasal, this will aid in the tax basis and validity of the second mortgage as well and can also be used to justify the down payment if property values change, just good insurance, IMO.Now, let's say A defaults in making payments required.