Exercise.

I care much more about your feedback on my thought process than on the prospects of this deal in particular, which was more of an academic exercise than a serious consideration.Thank you!

First you need to do a quick feasibility exercise to determine if the project will work financially.  

@Anton Taylor The bank has the right to call the loan due, but that doesn't mean they will exercise that right.

A portion (or all) of your lease payments are credited towards your down payment if and when you do exercise your option to purchase the property.You can then (make sure the lease option explicitly gives you the right to do so) rent the property out and manage it.

-Tenant has recently contacted me to state that they would like to exercise their option to renew.

I would spend some time to drill into the numbers, just as an exercise, and see where you end up.

And if the tenant/buyer exercises their option to buy then you will profit $5k ($195k sale price - $190k owed on the loans).

If the numbers don't work, get out of the deal by exercising the inspection contingency that's (hopefully) in your contract. 

If you are taking the potential rent and subtracting her current or potential new mortgage payment, that is not a relevant exercise to determine if it is a good investment.There are weekly posts on BP from new members wanting to convert their old primary residence to a rental and, in many cases, it's a bad investment decision and, in all cases, it's limiting (only one property is being analyzed).