Assuming all rents are substantial they should be able to cover my debt service and any other expenses needed (repairs, water, vacancy, cap Ex, etc.) 

So far I have been expensing  my education cost, application fees, and other association fees to the partnership.

In an ideal world, we could 'expense' the reno cost on the new home from the rental income from our old home.Any insight would be greatly appreciated!

I don't think that's possible in this case.Figure out the taxes and expenses and come back with the cap rate.

If I didn't realize before that this was the expensive and slow way to go, I sure did after writing that down payment check.

If they don't don't exercise the option in 5 years, we can just sell the property or do another lease option and we stand to make even more.The reason I like to do lease options over rentals is because in the majority of cases, I don't have to budget for the 3 highest expenses that come with rentals: vacancy, turn over, and capital expenses.  

Really enjoy remote management, my hometown (Philly) has gotten expensive for short term rentals IMO.

Can the expenses (including interest,taxes) be split equally 1/3rd as well?

Is it better to buy older properties that are cheaper, with a higher return, and higher maintenance, or more expensive properties with lower returns and less maintenance? 

It is more expensive than fannie, but not like hard money.