Lease option to avoid large POS escrow

[Kelly Buchanan]

I am interested in purchasing a duplex in an A neighborhood. The property is gutted to the studs and would require 100k minimum in rehab. The house is owned free and clear. The city has pretty stringent POS requirements, one of which is 150% of POS repair cost in escrow. This is obviously a major impediment for all parties. I would like to consider a lease option followed by an owner financed sale. I would complete the rehab during the lease using HELOC on another property then execute purchase. Final step would be to refinance with a conventional loan to pay back the HELOC.

Is this a convoluted and/or misguided idea? Any thoughts or suggestions would be appreciated.