Lease option in Los Angeles?

[Clarke Cuthbert]

Two roommates and I are currently renting a small 2 br house for 1650 a month in Sun Valley.  We found the rental almost immediately after the owner bought it (according to zillow, for $230,000 with all cash in 03/14) and have been here a little more than a year.  He collected our rent for the first month of the second year but hasn't written a new lease yet.  

I am wondering if a lease option might be reasonable for me to ask about?  If so, would it make sense to try and sublet it, continue renting along with my two roommates, or try to improve it and either give other tenants a lease option (lease option "sandwich" described in Brandon's book) or exercise the option and sell when the time comes.  

Even though he was trying to rent for $1500 before we moved in and agreed to pay $1650 (because of my dogs), I feel that it might rent for more, being in Los Angeles.  Especially if I were able to fix it up a little.  He made it just nice enough to live in, but there are definitely opportunities to improve the property.  Is anyone familiar with lease options and/or the San Fernando valley market?  I want to begin to get involved in real estate investing but only if there is potential to profit for everyone.