If you have serious cracks with large gaps or it is uneven, then you might want to consider some options, but it sounds like your problems are not big.I would consider doing the paint job if the current paint is bad or the color is ugly. 

If you were to purchase this property with 25% down, at the asking price, I think that you would be losing money for a few years until you can increase rents 20% ($1200-$1300 per unit).

A yearly rent increase is written into the Lease Option so the amount I get increases each yearf.

Can I increase the rent since its 2 extra people in my property?

Listing would include high quality exterior & interior renderings, floor plans, description of finishes, plus something like "still time to choose your own counter tops, vanities, colors etc... home under construction and finished Sept."

Earlier this year, they successfully renegotiated the lease with an increase.

The limit increases the more units the property has (up to 4).

I think the insurance plan I can rely on for the pension increases my ability to leverage myself without worrying about losing everything as much.

If you could do that and tremendously increase your equity, raise rents you may be able to improve your cashflow and then take out some of the equity and go invest it elsewhere.It seems like you are sitting on a huge opportunity to develop some equity, just have to look at all the scenarios and see where you come out best.If you sell, while you may get some walking money and a nice profit, you are likely leaving a lot on the table for the new owner to capitalize on. 

It's having the mentality using leverage to increase the income, which will than accelerate the debt payoff of income producing assets all the more faster.