Also, since my cash on cash return is not stellar, should I just pick my percentage of return and just work backwards to figure out my max offer?

This is the "burned out landlord" approach where you can pick up several properties at a time... or perhaps their whole portfolio at a discount, and they are likely to understand what you are looking to do so there is less to educate the sellers on.Hope this helps... good luck!

Im ready to look into the classes and want to start saving money so I can buy what I need.

Definitely lease optioning your own home to sell it is the way to go.... as long as you use contracts that protect you, negotiate good numbers, and carefully pick a quality tenant.

Upper level has world-class city view.

They will tell you how the houses can be separated and hopefully the surveyor you pick is a friend on the zoning administrator.

He then proceeded to tell me that real estate was the best asset class since you could buy properties with little to no money down.

I believe that right now its a matter of picking the person who will do the least amount of damage...

I used to rent a 2-bed house in middle class San Jose 10 years ago and the owner at the time sold it for around $450k.

The concept of lease-option to increase rent is tried and true.However, in your case with a condo...you did the right thing to sell it.Never buy a condo as a rental...the long haul for real estate is appreciation, increased rents and keeping expenses low.Condo dues...no land...all go the other way...Stick with single family homes in working class neighborhoods...Good Luck!