It depends on many factors. 

You are right to be thinking ahead, there are many factors to consider and making sure you are ready well before you choose to act is wise. 

:-/Ideally, I'd love to use the county public record as the initial basis, as that would be the highest number, resulting in the highest depreciation deduction.What's the correct thing to do here?

Everything is in good condition, they just don't want to be landlords anymore and would like the best price they can get for their house, ideally without having to put it on the market from out of state.After recently reading @Brandon Turner's "Investing With No/Low Money Down," I got the idea for a lease option, and would very much appreciate any feedback, insight and thoughts!

Yes that's correct assuming you bought them at the right price where you were able to get all your cash back out.As far as the future goes you would have a mortgage on each house after you do the cash out refinance.It's crucial to make sure you know what that payment will be in advance to factor it in to your deal analysis.

If anybody would like to give me a new route, New suggestions, New ideals any mentors that would like to help me connect the dots in the Atlanta area feel free to comment... 

When making this decision you should factor in a whole lot of other things as well (income, retirement, safety money, etc.) so I am not going to give you advice on that without knowing your situation. 

Ideally, as you progress as an investor, you will qualify based on your tax returns.

It doesn't matter that the rents aren't showing up on you last tax return, they will just take your gross rents from your leases and subtract 25% as a vacancy / maintenance factor and then subtract the new mortgage PITI from the remaining number.

Then you need to put $200,000 of repairs, so subtract 200,000 from 420,000 and you get $220,000.This is the max amount you could offer on the property to get your cash back out, and you're not even factoring in closing costs and holding costs.