Dean, You make a great point and this is the reason why I am looking for an attorney that will be able to help me draw up some type of partnership contract, a joint venture contract so that everything is in writing and no one can say they don't know their roles in the partnership.

Since I am living in it and this is a thought exercise I am not worried about it. 

(You'll increase your ROI considerably, as only 30- 60% will typically 'exercise their option to purchase,' unless you're very selective about who 'gets in,' and then they must also either set aside money monthly and/ or 'repair their credit,' as part of the deal... after putting down a significant (non refundable) amount, up front. 2- 5% is not going to work well here in California I don't think, in many instances???

I now that picking the right area and location plays a big role in one's success.

This exercise is also valid when you see two or more properties and assign them the timeline or projection based in your own math, comparison of two or more properties, which properties will provide the optimal cash-flow.

The sale - and therefore the 1031 Exchange - would occur at the back end once they notify you that they wish to exercise their option to buy. 

Having an international population naturally raises the familiarity of that area for individuals seeking to place capital (annecdotally, I know people whose Aunt or Uncle has bought a property here in San Diego as a way to invest cash - I see the foreign mentality at work).Great conversation above about the role VC plays in the housing market.  

Play the role of property manager so when you need to be a hard-you-know-what, you can blame that jerk of an owner.  

A lease audit is the exercise of comparing the information on the rent roll to the actual lease files. 

Hopefully a larger role in RE as my career progresses.