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

I have been trying to think through this mental exercise a fair bit lately.

This is what I envision:Step 1: Find Property worth buyingStep 2: get financing for said project and do rehab to create equity ( 3 year term)Step 3: Find tenants that want to do a "rent to own" situation on a 2 year lease termStep 4: screen tenants and collect "money down/option payment" (somewhere in the realm of $5,000 and negotiate purchase price and get contract signed.Step 5: Hold the note for the 2 years and collect rent payments until tenant is ready to exercise, if they don't then sell the property for the appreciated value straight up and collect the equity.does this sound like a valid strategy, and if so can anyone provide me any insights into any potential pitfalls?  

The term sheet says that it does NOT contain all the provisions and terms that are in the loan documents.When I told them my attorney would have to go over sample loan docs before signing anything and that we would need a lot of the conditions to be adjusted, they just said no. 

The damaged tenant could bring a negligence suit claiming the landlord didnt exercise reasonable caution.

He told me that he travels to and from the property just to mow the lawn as a form of exercise and apparently wants to dictate the terms of the negotiation.

I would exercise plenty of due diligence before investing.  

Your inspector will inspect the major systems and a sampling of the units.Remember the LOI signifies the beginning of the dance not the end.Paul

If so, does anybody have a sample contract I might be able to use?  

This is an exercise in innovation.