Lease Option Deal Analysis

[Robert Burns]

One of the realtors I work with called me with following deal. She has someone who owns free and clear a SFR 3/2 in a nice neighborhood. He needs a cash injection to pay some medical bills. His wife has cancer. The estimated FMV is $150K. He willing to sell me the house for $90K and sign a lease option immediately to buy back the house in 2 years. Supposedly his credit rating will not allow such other strategies as a Heloc. The house was his mother-in-law's who now lives wiht him and she has signed it over to him. I need to decide on the monthly lease payments and the price of the home when he exercises the option in 24 months. I have asked my realtor to run comps and also a credit check on the owner. I also asked for a preliminary title search. Is this a good deal? Have I overlooked anything? Finally I don't have $90K in cash so I need to find the money. What funding source would you recommend? I can tap my stock/mutual fund portfoilio but that would be taxed as income and I also would lose any appreciation that money would have made in my investment plan.