The due on sale clause can not be exercised by the lender as long as title is transferred to a land trust where the borrower remains a beneficiary. 

This is a great exercise as it gets you thinking about all the types of expenses (ie. will there be a prop. manager, what will you allocate for repairs and maintenance, cap ex, utilities, etc. 

Also, instead of a full lawsuit to force her to sell, can I simply place a lien on her house to simply recover for my costs with the appraisal & attorney feesThxIf the cost of removal of violations required to be removed by the Seller pursuant to the printed provisions of this Contract of Sale shall be in excess of five hundred ($500􀀉 00) doll􀀄􀀅s, the Seller is hereby granted the option to withdraw from this Contract of Sale, in which event the Seller shall refund to the Purchaser the monies paid on execution hereof, together with the net cost of exa􀀊ination of title and any survey actually incurred by the Purchaser, not exceeding rates usually charged by any major title company where no policy is issued and where title shall fail to close; whereupon this Contract of Sale shall become null and void without any further liability on either par􀀁y to the other unless the Purchaser shall agree to take title subject to said violations and assume the performance thereof and receive an abatement in reduction of the purchase price in the sum of five hundred ($500􀀂00) dollars􀀂 The options herein granted shall be exercised by notice in 􀀋riting by certified mail, return receipt requested􀀃

I find it to be an exercise in "who cares".  

I thought it might be a fun exercise to put it out to the community, what would you do to this property.  

And if the funds are held in escrow, then there could be a request or debate later by the tenant to have the funds returned if they failed to exercise the option.On the flip side, you may want to record a memorandum of option and service your option payment to the seller through escrow to cloud the title and make it possibly more professional and binding if you have a large option fee at stake that you've paid the seller and if it gives the seller some peace of mind... but not Necessary...

Get up early to read, value exercise, and be willing to pour yourself into your real estate adventure.

Decide who will be responsible for general maintenance (lawn care, appliance repair...).Also consider a 6%-8% maintenance add on each year to the final purchase price if the person decides to exercise the option.

@Rachan Malhotra,Again, @Joe Villeneuve called it.If you still want to do the exercise, you can determine your maximum allowable offer:ARV minus rehab cost minus holding costs minus closing costs minus your anticipated profitThat's still just an estimate because rehab costs are estimated and no contingency for out-of-budget costs is figured in. 

If they purchase, the option fee amount paid will be reduced from the purchase price to lower the purchase price on the sales agreement, after they exercise their option to purchase.* The property is not sold and title is not transferred until the tenant exercises the option to buy.