Guidance needed! Unexpected lead!

[Jason Krick]

Hello everyone.  This was not expected to be my first post.   My profile hasn't been completed and I haven't networked yet.  I've been lurking, reading, and listening for months, trying to learn as much as I can before I dive into this business.  However, a possible lead just came up and I'd like to ask some guidance.  I have lots of questions.  Here it goes:

There is a house on the street directly behind me that showed up on the Sheriff's Sale list in December.  They just put a handwritten sign up in their yard that states:  "Lease to Buy.  Available Immediately."  On Zillow, it states the house is 2,714 sq ft with 4 bedrooms and 3 baths.  This is bigger than most houses in my development.  Most are in the 2,000 sq ft range.  I've been keeping a close eye on sales in my neighborhood, as it seems like it is "turning over" from older owners to younger families.  They appear to be selling for around $90/sq ft+, depending on condition.  This house was last purchased in 1995 for $125,000.  

My ideal scenario, would be to negotiate a price below market, rehab it, and then sell it. I'm not concerned in the numbers at this point, but more so with the process. Let's say I contact the owner, and the numbers make sense for me. Then what? I do not have the cash at this point that would be required (which is why I planned on waiting before jumping in). I would assume I would need an initial payment to cover any money owed, to stop the sale. So, could I try to access private lending, or HML to cover those costs, plus rehab and holding costs? I have zero experience to date, so I know it may be difficult to get a loan, but it would seem that I would need a lot less than 70% ARV in this scenario.

Also, what risks do I assume in this kind of arrangement.  What if I pay the money to stop the sale, and they decide to keep the money for themselves?  Could it still be sold and I am out of luck?  If I rehab it in a month or so, do I have the authority to sell a house that I currently only have a lease option on?

I guess what I am asking is if anyone could just walk me through step-by-step how you would go through a process like this?  If the numbers don't work, it's obviously moot.  I can analyze those after I contact them.  I just need some guidance on how to go through this process.

I do have access to a REA who specializes in foreclosures, short sales, and investors who flip houses.  I also have some contacts for rehab work.  

Thanks in advance!

Jason