b)  trying to exercise redemption rights on another house foreclosure deal.  

The downside would be if the the lenders finds out about the transfer they could exercise "due on sale" clause and call the loan due.

Do I have to sell back to the original owner if he/she pays me the price for which I bought the property if they choose to exercise their right? 

Frequently the REI/consumer applies to 3 or 5 different HELOC lenders before a credit line is actually opened -- the better rate HELOC has higher standards, so REI/consumers go through this time-exhaustive exercise of getting denied a bunch because the 4 best rate HELOC lenders denied them, it's not until the 5th that it's approved and open.

Set up an option to buy at current or below current value.Then exercise option to buy by either going to the bank and get 100% financing, after you have had a vested interest for 12 months.So you do this to show a track record for a year?

In downtown Detroit, Dan Gilbert (Majority shareholder of Quicken Loans and the Cleveland Cavaliers) bought a large number of buildings, renovated them, and induced the owners of small companies in which he invested to locate in those buildings.

I'm using Loopnet to find deals and work the numbers, it's merely an exercise to get more comfortable running numbers:The "deal": http://www.loopnet.com/for-sale/ca/?

I'm going to pass on this because the rehabbing is way over my head and I want to stick with what I understand, and, I find the exercise in learning interesting. 

But also agreeing with @Wayne Brooks this sounds like a wrap around deal otherwise the existing lender could exercise the due on sale clause, another thing to look into. that's my .02

Now it is pricing change which is a constant learning exercise.