Hopefully it will work out!

This could probably work out for them, yeah they'd start of with no equity in exchange for keeping that 3.5% and using for say replacing furniture.

Get the property under contract and then work out the title issue and who has to do what to clear it.

Welcome to why strategies that work on a spreadsheet don't always work out in real life.

This way if their plans do not work out they can resale they property for cheap and get out versus sitting on holding cost for the land for many years sinking non-productive capital into a project.The house is not a benefit.

Also, you may decide to manage the property yourself so that you can keep the property management fee.All in all, I think it is a great idea to purchase a rental, even if it doesn't work out as expected as long as your willing to learn correctly from the experience.  

@Anthony Gayden selling a house for 160k that is Worth 250k doesn't sound very appealing to me either as an investor.Let me give you an example of how the numbers work out so that you can see why the numbers make better sense for us to do the lease options.Last November we purchased a house in Apache Junction, Arizona.  

Some products they have territory and strict pricing policy, but some dealers still able to work out something out creatively. 

How did it work out?

Stay persistent, it'll all work out in the end.