See if they want to invest for profit on your venture.

I am trying to get my first wholesale deal so I can use my profit towards marketing to leverage my business.

Use the 1% rule as a starting point to cut out all the “distraction” properties and get you honed in on the profitable properties and areas within those sub markets.Then, when you have your financing together, find someone who has a great property and great tenants and great return, and buy the house next door. 

What is the best strategy out of the two I am about to put down below Strategy one: Flip homes sell them, take profit and keep flipping, paying taxes at the end of the year Strategy two: Flip homes 1031 exchange profit into the next deal until you have profit greater than your flips that you have to buy multiunits due value of past properties being a good amount of money.

I figure doing my own flips and renovations will offer the highest potential for long-term profits with my current situation in a rural area.

Otherwise, profits are lower, it's hard to find compelling deals, and there is little room for error in deal execution. 

My concern is that the business having such a low % of tenants that complete the process that it seems as though a good part of the reason that RTO / Lease option is so popular is that the failure rate is what is driving profits. 

If you finance 50% of the property (with a non-recourse loan), then 50% of the NET profit is taxed after you deduct all expenses and, yes, depreciation from the portion you financed. 

I've been told they can be extremely profitable, but I seem to be missing the point.

If you are unable to predict your future profit (IRR) within a certain degree of confidence, that's when it becomes speculative.