Take a look at this deal, and letme know if I can do better.

[John Bravo]

Hi everyone, I have a bit of complicated deal (atleast for the inexperienced) Please let me know what your thoughts are and how best for me to proceed.

This sfh came to me from a friend, apparently his father went through a mid life crisis, the ex wife got most of everything, anyways he is 5 months behind on a rental property he has owned for 18 years. He contacted me and asked if I was interested in purchasing the property.

I got him to give me a payoff sheet from his lender.
His principal balance is $50647.47
interest rate is 8.875%
he owes 5 months in arrears.
his monthly payment is $502.85
Total payoff of $53620.43 is good until Feb. 1st
He wants a couple grand (he said 9-10) to get back on his feet.

Home is assessed at 95k (City Property info)

He has had a tenant in the property for 18 years, they have no intention of moving, infact they would like to purchase the house themselves
Tenant is paying $600 a month, they cover all utilities.

Anyways I went to the property today and built repoire with the tenant. They have no intention of moving, infact they are afraid if I buy the house I would kick them out.

I brought up the idea of doing a lease option, they love the idea, said they could come up with a 5k option deposit, and I told them their rent would increase, but for whatever it increases I will give that to them as a rent credit ($750 they can afford they said), 1 year option to purchase at 80k-85k. They like the idea, and I told them if in 1 year they cannot get approved we would renegotiate (hoping to collect another option payment). I told them I would not be responsible for any repairs, the home will be theirs in the end, and they agreed. Again this is just talking, nothing has been signed yet.

If I can take over this property, bring it up to current and pay the seller off say 4k. And then collect an option deposit, I would be coming out of pocket a couple thousand for a cash flowing property. IF this deal goes how I have it typed. Does this deal make sense? Am I in over my head?

Let me know if there is any info I have missed out, or if I completely missed the boat on this one.