Should I contribute some capital to have "skin in the game"?

I think that you have a pretty good game plan in order.

The sellers are selling their homes for full market value (no realtor commisions), and enjoying fair market rents from a lease option buyer who's been talking to a mortgage broker from day 1 (and has a little bit of nonrefundable skin in the game).

So play the numbers game and keep going until you find someone that needs your help to get rid of their property.  

Hello again everyone, I am still new at the real estate investing game and have a passion for real estate.

@Cody Barrett is the seller open at all to seller financing, or is he pining to get out of the game?

I'm pre-qualled for a conventional loan with 20% down, so I have some skin in the game.

Most lenders like to see you have some "skin in the game" , so may need a down payment and some closing costs at the very least - however , there are still opportunities to wholesale or bird dog which does not require down payment money but may be a lot more difficult without a marketing budget.

Another option is to buy a single family in a B neighborhood in the low threes and try to get $1600 to 2k for it - not super great but gets you in the game at a relatively low price point.

They have been given a chance to move in and hopefully own a very upgraded home will all upgrades that they could never right now afford, and they are too lazy to: recycle dead batteries ( it's hard to drop off at most car supply stores, Sears, etc), do not live up to agreements with any company ( landlord, DirectV, Dish TV, etc), Always switch jobs ( I approve the lease based on their incomes, and they wait until moved in and then change - as if they know how the landlord "game" is played), etc.