If I understand correctly, and if the IRS regulations have not changed over the time of this conversation (since it started 7 years ago), we could (and please let me know if I am on the right track):1.

There isn't the same level of regulation or scrutiny as with residential lease options, which are subject to specific tenant protections.Flexibility: Lease options can provide flexibility for both parties.

s, first rent of the newly created unit must be equal to the combined rent of the two previous RS units..in addition, newly created unit will still be regulated, NYS senate just passed bill S2980C..Substantial rehab is the only remaining strategy, which is not cost effective in the current market

Any business or corporate entity looking to execute residential projects on a certain scale (which is sort of a regulated activity) either has to obtain a license (for the entity) or contract/retain a general contractor.

I imagine in time, most areas that do not already have rules and regulations (not just in Oregon) will implement them.

I don't think you're a bad person nor do I think you mean to be discriminatory, but regulators will see your posts as evidence of discrimination.

This step ensures that your IRA remains compliant and that you don't inadvertently violate any regulations regarding personal guarantees or liabilities beyond the property itself.

@Matthew Wright you're going to have a hard time doing this.Currently, you are bypassing a LOT of regulation requirements by letting the prospects pay the 3rd party directly.If you want to collect Application Fees, you will need to take on all the responsibilities & corresponding liabilities of Fair Credit Reporting Act and Data Privacy regulations. 

I would try to avoid Berkeley and Oakland because the laws heavily favor tenants and who knows what local regulations could be passed. 

Consulting with a tax professional is highly recommended to ensure compliance with IRS regulations and to maximize your tax benefits.