They are probably below market rate so you are losing money.2.

In places like NYC, where the rental vacancy rate is below 1%, all the power is with the landlord and this will drive prices up.

Also would hope interest rates may be better by the time everything would be complete.

Then, do a cash out refinance after renovation and rental rate correction.

A lease with the option to purchase at market rates makes sense for right of first refusal if they have money to deposit.

@Robert Finn What is normally the interest rate the two sides of a seller financing deal agree on?

That can also cause issues with expired mortgage rates, rate lock extension costs/fee's.

With current interest rates around ~7% for investment properties the net cash flow initially with new construction or turnkey would be 1-2K/month (terrible CoC return).

Note has terms of repayment (amt, rate, term, special conditions). 

Look at trends in property values, rental demand, vacancy rates, and economic indicators to assess which market aligns better with your investment objectives.Risk management: Determine how much risk is involved in each choice.