Devin, instead of asking for legal advice online from complete strangers you could pay an attorney for their expertise on the matter, reach out to the NH RE Commission, or read NH's RE laws to see if you need a licenses to advertise a property that you do not own. 

I do have a friend who knows everyone and has never met a stranger. 

However, when I mentioned this to the insurance company they said they do not cover STRs that are set up this way - too much liability with having total strangers sharing common areas. 

You should go to an attorney, especially for this kind of contract.The fact that you're asking for a lease-option contract from strangers on a public forum tells me you should reconsider.

I understand the situation you were referring to i.e. the seller not knowing what the house is worth, however, I would think that the majority of folks selling to flippers and wholesalers KNOW their house is worth more, but just don't want to go through the hassle of listing it, having strangers going inside for showings, performing repairs, buyers DEMANDING that ludicrous/fictitious items be repaired, getting hit with reductions because of the inspection report, getting low ball appraisal so now you have to reduce the price, fake buyers, fake financing approval, having to pay thousands in closing costs because buyers are cash strapped, etc.

You all hit the nail on the head and I'm happy I crawled out of my shell to ask you for help...strangers on the Internet.

Are these friends , family or strangers?

We lived in a travel trailer and just parked it behind whatever project we were working on, so we are no stranger to doing whatever you need to to make your goals happen.

She is pretty much a stranger to you, so I'm not really sure why her poor health and financial straits would have much bearing on taking the best action for yourself. 

------------------------------------------------Families can stuff children and family members into areas that strangers cannot be put into.