I am trying to avoid hard money as the project is estimated to take up to a year due to weather conditions, area restrictions etc. 

Here's what I found after a little research:Duplex4 bed/1.5 bathComps: $160k - $285k (at least what I can tell from zillow/trulia)Houses on the same street (in much nicer condition) are estimated on homes.com for $236k-$436k.

@Shawn ConnorsA perfect lease option house is-Good safe neighborhood - quiet street-good condition-payment PITI = payment rentIs the listing still in effect? 

You should be able to net $10k with 40 units without working more than 10hrs/wk.My experience has been that every 10 units, if in decent areas and condition, require about 2hrs/wk worth of work.You should buy the first property and see how much time you are spending there every week.

It really depends on what kinds of property you are looking for, what kind of condition and what kinds of % returns you want.

Maintain your properties condition in line with the quality of tenants you want.  

Keep in mind that negative reviews don't necessarily mean a bad manager but a pattern of negative reviews indicating the same conditions or practices is a bad sign.

Remember that FHA mortgages have very stringent requirements for condition of the property, and its possible the current owner has gone through the inspection process and found that the property is lacking in certain areas, perhaps in items that the owner is unwilling to remedy prior to sale.Last note: you wrote that the owner specified it would NOT be able to be an owner-occupied purchase... was the property fully rented with leases in place?

A mobile home can rent for 500-600 a month for a detached 3 bedroom 2 bath home in decent condition.

You will have to have a statement of conditions filled out, give the tenant a receipt with the bank name and account number, you must pay interest, etc..This could be a turn-off for an existing tenant that has never been required to pay a security deposit.