I keep running into sites that are strictly for the USA and am wondering if anyone knows if there are options within Canada that are trustworthy and reliable.

Landlord Tenant law of your state is strictly followed.Example:$100K house, $800 rent, 12 mo lease, $100 option payment, 12 mo lease, no rent credits, $3000 option release feeSales price 100K - 3K = $97KResultSeller gets good tenant, 3% sales costs in 12 monthsBuyer gets use of great house, pays 3% plus rent, must qualify for mortgage in 12 mo.REI gets 3% or $3000.OPTION of $100 is credited towards purchase price of $97K IF THE BUYER GETS BANK FINANCING.This can hardly be construed as a disguised sale if done this way.And mortgage origination people do not like to originate lease option mortgages with assigned paperwork from investors to buyers.

I know if it was strictly a flip property that isn't a big enough margin.

I think my biggest concern would be whether or not you can put both your names on the title as well as the loan (FHA might be more strict than conventional).

HOWEVER, Fannie/Freddie allow banks to be more strict on their guidelines.  

I have access to a lot of pre foreclosure home owners and have been thinking about contacting them but my real estate investor friends say it's too complicated and very strict law. is that true?

Of the few that would loan to us, some had really strict terms.

He focuses strictly on fix and flips but usually only buys 1 house at a time.

You do realise that despite following the terms of a rental agreement/written lease strictly and uniformly you could still be in violation of  Fair Housing laws. 

I do know a commercial loan officer here locally who might underwrite these based on debt service rather than strictly your income.