Treat it like a lease with the option to buy with a non refundable down payment.Keep thinking creatively and shop your market every day looking for deals.

Some things you may want to consider, it is generally a good idea to have a separate lease agreement from the purchase option. 

Hoping to get some feedback from investors in the same position or a CPA.

Second option, if it's even valid, I could build a new house in one of these new communities and then have the house for another few months and sell it (assuming that it would have increased in value) Any input to any of these two strategies would be highly appreciated!

I calculate that a quadplex would make my effective rent $350 below what I'm paying in rent today and when its fully rented it would bring in $700.It takes longer to get the quad but it has a positive effect on my saving rate versus treading water in the duplex which requires me to move to "make" money.

As responsible Real Estate Investors,  we want to educate them on their options:  Mortgage relief programs, loan modifications, forbearance, short sale, etc. 

Initially I wasn't really keen in renting to a family with dogs but since I do not have an option, I am thinking to proceed.

Our goal is to have multiple properties with positive cash flow over the next couple of years. thanks in advance!

Look for other types of renters who aren't necessarily affiliated with hospitals or go just outside the neighborhoods immediately surrounding the hospitals and market it as a good option.

Timing does play a role here and you may just want to hedge your position, start the cash flowing, and then revisit a higher rent when the market is humming.Hope this helps...