I mean, even someone with a bankruptcy can get a 600 after a year or two.

What's the likelyhood of you going belly up, taking bankruptcy?

Some of this has been mentioned, it's easier for me to list some of the real estate issues;Draft, review and have contracts and disclosures excutedDraft notes and deeds requiredEscrow funds and make disbursementsIf they are title agents as well, they can issue title insuranceDo title examinations and issue a title opinionClose the transaction and do the filings neededSet up an escrow account and oversee paymentsAct as the Trustee on the deed of trustHandle notices of default and secure collateral in foreclosureRepresent you as a creditor in bankruptcy mattersReview construction contracts and represent you in disputesRepresent you in Tenant disputes and evictionsObtain judgments and provide collection servicesRepresent you in sale contract and disclosure disputesRepresent you in obtaining compliance or relieved from code violationsBest of all, they can keep you out of trouble!

When the owner says he "surrendered" the property, perhaps he means during a bankruptcy?

In my option based on your best case against your worst case (which could be worst then you think if any of your sub-tenants file bankruptcy and living free in the place until the court allows you to evict them or something happens to you and you miss a payment to the landlord and the landlord evicts your sub-tenant then the sub-tenant sue you.

The home has been vacant since the previous owners filed bankruptcy and the case has been closed since 2008.

Brief history I have a past bankruptcy and some financial credit challenges that need a little time to over come so we are looking to lease option the house we are in for a two year lease option.The current owner is asking for $460k as the sales price with $25k down.

They can choose to declare bankruptcy and make it even more time-consuming and expensive, etc.. 

Income level, credit score, bankruptcy/foreclosure history, rental history, term in their job?

I suspect that it is possible that you could get caught in a Debt-to-Income problem in the next house or two, so that's why paying down that debt will help you invest more long-term.Plus, you can never get out from under the student loans - it's nearly impossible to discharge them in a bankruptcy.