I am starting with wholesale and after lease options for 1rst income and start having some passive income.

A good reason to join or establish a landlord organization and to lobby and sue when appropriate.Sounds like properties might be placed under a contract for deed for conveyance in three years, it's not a sale and it's not a lease. :)

I got new month to month leases with the tenants just to see how they will pay... 2 tenats worked out ok but one tenant with a 2 year old child stopped paying rent after 1.5 month.

I will execute 1-3 of the requests pro bono (but not really, since I intend for the tenant to stay and instead of re-leasing costs I am improving the property).. and then may save a couple of the requests for re-lease negotiations/price bumps/renewals etc.

I'm not the pro at it, but perhaps some lease option (lease purchase) experts will jump into this thread.

So you've just got to capture some equity on the front end, at lease 15%+, by buying from motivated sellers, buying distressed properties and rehabbing, etc.However, the guy with 4 houses owned in cash can also probably easily manage them, saving PM fees, whereas the guy with 4x to 5x as many leveraged houses either needs a PM (and will pay them 12-16%, including leasing fees) or will spend many many hours of their life dealing with all the houses.It's also a lot easier to find 4 great below-market deals than 16+.I also like the comment someone made that if they had sufficient capital to buy a portfolio of SFRs outright, they'd probably just be a private lender and capture double-digit returns on a much more time-leveraged basis with less risk and more stability in the income.

Unless you plan on section 8 or lease/purchase(possibly to another investor) I don't know about this one...Kudos,Mary

My intentions are to buy the HUD property (or a wholesale property), refi, then sell it on lease option and repeat.  

I'm just starting out in the area looking to do some great things with lease options, working with @jbodek in his mentoring program.

Get copies of leases and read them, know what market rents are and always have a back up PM company you can use.