Time is also on your side regarding holding period. 

At $340k, it's not going to work and I wouldn't speculate about escalating rents or appreciation - not guaranteed, period...Nashville is very hot right now and the only way someone will make money on this duplex is if they tear it down and rebuild to flip.To give you another comparison, I just put in an offer for a 10 unit in Dickson for $300k - only 45 min's from Nashville.

You might want to learn advance creative negotiation methods.I don't care where you go in the US, there are deals to be made if you know how to negotiate them.Maybe some ideas on creative methods will help you find what you are looking for.Try, Hybrid offers, delayed settlement, principal mortgages, vertical break ups, take backs, study periods, subject to public auctions, friendly joint ventures.Control and Roll is a great way to sell properties you don't own and to make fantastic profits.Charles

As far as the exit goes, they'll either get financing within their 4.5 year option period or I will then and then sell to them on land contract.

I challenged folks to show me that over 5 years period (I am sure those returns are a lot less).

Most of the properties I am buying now haven't really appreciated in 15-20 years.However, if you look over 30-40 yr period, you do get some appreciation with inflation.There are a few areas, that are experiencing real appreciation.But the majority do not.Have to make your money on cash flow and mortgage paydownGood luck to you.

I would select the first option, but I'd like to know your expert opinion, and also if is normal way to propose a flip without option period...I look forward to see some suggestion.Thanks!

If that happens you could easily have to fork out $5,000 to fix the place up (Speaking from experience here), plus you could lose that rental income during this period.

I was hoping we were going to be entering a period of equilibrium...

Besides losing money from your registration fee and tax certificate fee (assuming they pay before the 14% interest period), are there any other downsides or other ways to lose money that new investors to the process should be aware of?