Even if you don't end up buying the place, I think doing this analysis, playing with the numbers, and seeing where and when your profits come will be a good exercise and inform your investment strategy.So, no I don't think that 70 would be low ball at all if these numbers are correct considering the work you'd be putting in and risk.

That will be my built-in appreciation when the Buyer exercises his or her option.

If the tenants pay their $1500/mo. rent on time for 30 months (no rent increases in my case, but a greedier person might want the rent to go up $100 for every year), and exercise their option to buy, I will grant them 5% towards their down payment at closing.

The hand digging was an "exercise opportunity"!

Now, this does not take into consideration the current occupancy, Deferred maintenance, Age of the property, amount of land, upside, supply index of the market, and getting the ACTUAL Expenses, rather than using an industry average of 35% as I just did in our little exercise.  

But if your intent is to enhance the rentability of a property you have held and rented for 2+ years you're probably fine.Your basis at the end will end up being around 900K (current plus improvements).  

Could do a 2 year lease now for the whole house with an option that isn't exercisable until after 2 years from now, with a 2 year sublease for you as tenant from tenant/buyer as landlord - or, with this structure, you could let the option be exercisable right away, since your lease would remain valid.

) WOW.......I was amazed at how friendly people were (and nosy) and how willing to chat with me.I listed and sold a property that is now the Fallston Shopping center on Belair Road, lots in Bel Air, commercial properties on Mountain Road (Maryland) and a few small subdivisions to mention a few.While fellow agents sat in the office (playing politics, and waiting for the phone to ring while on floor duty, I was out there walking and talking and getting good exercise, and getting to know people and asking my simple questions and getting leads).

If you choose to exercise your right, they cannot legally refuse.

@Mark W.Virginia is a very intensive legal state in real estate transactionsI would definitely consider getting my realtor license if I'm going to do this kind of business in VirginiaUnderstand that you can't guarantee that the tenant buyer will get the mortgage and I would have a registered mortgage loan originator look at every single tenant buyer applicationTaxation of option payments are not involved in lease purchase arrangements, they are earnest money agreements, not option money agreementsIf it was a true option payment, the money is taxed when the option is either exercise or expiresI train in leases, options and other kinds of agreements but I would recommend that if you want to do these transactions, you get licensed