The other issues I can see is the fact that he has just a verbal month to month lease.

Many landlords feel they want to charge top rent and wonder why they move out when the lease is up.

I'll drop that property personally or sell it on a land contract to another investor at a mark up or lease option it to the current tenant. 

As of now, it sounds like she's in violation of the lease.

Plan is to rent 2 unfurnished/6 mo leases + 2 furnished short term/AirBNB.My house just closed last week and now I'm in the process of fixing it up cosmetically (drywalling over old 50's ceiling tile, ripping up old carpet + refinishing the hardwood underneath, painting, new floors everywhere that doesn't have hardwood).

i lease the property out or fix and flip itLease Option- i sublet the property and sell it through lessees.Any other strategies?

The market is hot enough, that you probably won't have to provide a huge discount on your portfolio.An alternative is to vacate all of the units, and try to sell them to end-users (depending where they are in the lease cycle.)

Actually do a lease and charge, collect, and report market rent. 

Any advice on if a lease option is the way to go or should I walk away.

Plan to move out and rent unit C in 1-2 years.Mortgage: $183,000down payment: $6,405Mortgage payment with insurance, and taxes: $1450property taxes: $3,060yrhome owners insurance:  $1,740yrUnit A singe bedroom: $850 leased until 9/2018Unit B single bedroom: $800 leased until 6/2018Unit C three bedroom: currently leased at $1100 until 1/2018 but I will be moving into that unit.Landlord pays for heat in all units - seller said it is roughly $500 a month.tenants pay electric.Using the bigger pockets calculator I see that while I'm living there it should cover the mortgage / I may have to pay small amount.