OTOH, handing them a real estate portfolio to manage, learn the business and grow, will teach them to fish. start early and by the time they are ready to take over, they will not only be able to pick up where you left off, but start with an excellent acumen for business, finance, and economics which would server them in any profession they choose.Of course this is all predicated on suppositions.

The asking prices ranged from speculative to just plain stupid.  

While I agree that there seem to be some newer investors who don't understand cash flow (or maybe they are just speculating), it seems that if your scenario comes to pass, it would just create more opportunity for those who are able to buy properties at a discount from these burned out landlords

I'd also love to know more details on those numbers, but just for speculation sake, I would say:1.)

Well maybe J.Scott because he also seems to think buying a house is like buying gas, because he doesn't understand why gas prices go up and down, supply and demand plays a very small part compared to market speculation BTW market speculation goes right back to Freakonomics how individuals, organizations, and businesses often exploit their access to information at the expense of others.Again J, if gas rose to $20 a gallon and fell to 20 cents a gallon the next day, you would not have to pay on the $20 for the next 30 years.

If something of value (cash) was exchanged for the option then you are in a better position... because you do have a contract.Without reading the option agreement it is hard to speculate beyond that... however with a straight purchase agreement you have taken an equitable position in the property and gives you many advantages that an option by itself might not give you.... it would depend on how a judge evaluates the agreement... and your only recourse had the seller walked away would have been to take them to court.

Whereas outside of your area its more speculation. 2) People spend thousands of dollars learning their chosen profession so dont get discouraged so fast.

If you and your wife file a joint tax return then you're actually both the same tax payer as @Richard Sherman speculated. 

I can't say I recommend high appreciation areas because that will make you a speculator.

This market will always be speculative, and those who choose to invest have to time the market.