That means you will need to have it completely rehabbed by the 1 year mark and have an income stream to prove you are making money/can make the payments.

You are buying the revenue stream for a set period of time.Those trade at high cap rates because of the risk and difficulty financing.A typical ground lease where you own the land itself generally if the tenant doesn't renew after the primary term you get the land by default.Sounds like they just renewed a 10 year option.

There are many "Real estate Gurus" making another income stream by offering "free" seminars to anyone wanting to do this kind of business, and I've been to a few and know how it works and have the $2000 books to prove it.This forum is really all someone needs to get started.

I have a friend who would like to immigrate in a few years and he is thinking that getting a few buy and hold properties will be part of his income stream once he does.

If you are able to handle carrying the present house on your own, you could look into buying out your housemate's interest (i.e. you will assume her portion of the mortgage in exchange for a long (24-month ...) lease as a tenant).This would give you the ability to refinance the house, and show an additional income stream.  

Very few people would recommend going 100% into real estate without any real world experience and without another stream of income you can live off of. 

Arguments to make for this:  they could be the bank, continue to receive income from you, get their capital gains over time rather than in a lump sum, continue to have a stream of income without the burden of tenants.  

This would also offer you the opportunity to add an additional revenue stream to your site (most important obviously).I hear you on your reasons for enforcing the always been there rule and it does make sense.

Seller financing in our area is as rare as a good Will Farrell movie and subject-2 deals that make sense are even harder to find.One of our rentals used to be my primary residence for around 5 years, so financing that was purely conventional.

(Although you could, in theory, argue that the professional management had a hand in getting that price for the property, if the numbers were better as a result.)I think you might be able to make the argument, though, that if a property owner and the property manager have a year-long agreement, and the property owner seeks to break that agreement mid-stream because the property is sold, the property manager might be entitled to a little something as compensation for breaking the agreement early.