The idea of having houses and building ownership turn enough of a profit to live off of, sounds too good to be true. 

R2O's and Contract for Deeds are some of the most profitable deals you can do -- if you set them up right.

I feel like he could partner up with one his flipper friends, and at least profit from the sale. 

As money  gets more expensive, it will tighten  up the profit  margins  of investors.

Option 2: I have been finding more deals on the more expensive houses in the 250K+ range, i have crunched numbers on a handful of houses in this range come across a good number that have showed positive passive profits in the $200+/month range, but im concerned on these taking up to much of my active income.

I tend to agree with this statement and have been successful in helping companies identify their profit producing activities and then create systems and processes to make those easier. 

Until an 'investor' reaches critical mass (escape velocity) in number of units turning enough profit that even the occasional catastrophe won't  change their life style, it's got to be keep your head in the game and all hands on deck.It's all fun until it's not.  

The mentality I had was if these people were the real deal I thought they would give REIA meetings and if someone had a good deal they would be willing to work with you and take a percentage of the profits instead of charging $24,000 for coaching.

Even with 1500 a month coming in there just isn’t much in the way of profit that it would be worth your efforts and money .

I would sacrifice some cash flow for a good PM team that knows how to minimize expenses and increase bottom line profits.