Are you aware that a lease is not a purchase, meaning that until you exercise the option you don't own the asset.  

He expects the land plus construction savings (through me, I offered 30k construction management with at-cost reimbursement), to bring total equity of 35-40% from arv (sample computation below). 5.

If they fail to buy, I received significant option money and above market rents all the while off loading maintenance responsibilities to them.My fallback position is they do not exercise the option or they violate the terms of the option so I keep the option fee (typically $10,000 for the size of houses I've been working with). 

Then when it comes time for you to exercise the option, have a double closing with you, the present owner and the new tenant.

However if the tenant doesn't exercise this option the higher rent rate will still go into effect on a month-to-month tenancy.Your rent increase cannot be "unconscionable" (unreasonable) and you have the burden of proving that the rent increase is fair.And if you are interested in just how a judge is supposed to determine whether your rent increase was indeed fair:In Fromet Properties Inc. v.

Try not to tie-in substantial lessee improvements with the option exercise.5.

Here are exemptions to Due on Sale(d) Exemption of specified transfers or dispositions With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon— (1) the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property; (2) the creation of a purchase money security interest for household appliances; (3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety; (4) the granting of a leasehold interest of three years or less not containing an option to purchase; (5) a transfer to a relative resulting from the death of a borrower; (6) a transfer where the spouse or children of the borrower become an owner of the property; (7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property; (8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or (9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.

Swimming pools, exercise facilities, and playgrounds should be limited to tenant use only, and be properly maintained.

If not, I would demand a substantial discount because you have to assume the units that weren't viewed are in worse shape (I've done this before on a package of houses, one of the things I did was ask to select which houses we viewed, thereby making it random and more likely to be a representative sample than if the seller had picked).

I will also get to exercise my scrubbing muscles cleaning the kitchen, which is currently coated with a layer of grease, presumably from the 3 deep fryers in the house.