I can create a private profile for you on our site & see if we have any interested property managers. 

Flips are a great way to multiply capital, even a better way of creating capital (by using all hard money).

There's a lot to be said for creating goodwill with tenants, especially in the beginning.  

The home is 1700 square feet so creating a 3rd bedroom should not be a problem.  

I do not know too much about investing; so i am kind of looking for other beginners/advanced individuals as well as some mentors to help me learn the roads!

I would do what you are comfortable with and no strategy will work the same for two individuals. 

This creates a WIN-WIN Situation and gives the Realtor incentive, to work harder on your behalf. 

Looking to meet like minded Houston individuals.

How do I go about creating a subject to our lease option agreement? 

If you are trying to do both cash flow and appreciation then you may want to sell it in the next 5-10 years and realize your increase in value and this would be more difficult in a "run down" property and it may not appreciate as much anyway.Another thing to keep in mind is that a more "run down" property will attract a less quality tenant which can create more stress and worry.