I loathe getting my spring clean up bill from my PM, it's alway a couple hundred bucks and, while necessary, annoying.You'll want to start as close to the 2% rule as possible, so about $85k this place would be a steal.  

I figured I have nothing to lose but time, and by seeing my great work ethic, I may be able to establish a great relationship with the investor and could grow into an eventual partner.

Making sure they are really clean is extremely important.

I admit, I have done a few deals without coverage, but I also knew the properties very well, knew the factors associated with the title, knew they were clean without any construction or other matters that could be the basis for any claims, and, I was willing to accept the risk (self insure) my period of ownership.

It takes two years of established income to begin count it.

You have to establish relationships with them and that can take time.Give us some numbers on the house.  

The appeal of a lease option, is ideally selling it to the first tenant so that I don't have to worry as much about them moving out and having to touch up paint, clean or replace carpet etc as well as market it vacant vs cash flowing.Is this actually a bad idea?  

Find something that needs paint, carpets, landscaping and cleaning, if possible.  

T o me Not a problem it can probably be cleaned .

If someone cleaned out all of their stuff and paid rent to me for three or four years on an empty apartment, I would be as happy as a clam, because its not causing any more wear and tear on the property.