Hi Brian, I have Obie in my properties now, although I've never filed a claim with them so far, they are the better rates I can find, ask for their tenant liability coverage, I paid an extra 107 dollars a year and they cover up to 100k if a tenant severely damage your property. 

@Rafael Ro Why are your numbers different for options #1 and #2?

The only question is if the increased risk of loss is worth the extra return. 

If possible, consider a duplex or single-family home with extra rooms instead, as they offer better appreciation and flexibility.

Quote from @Dennis McNeely: In a sandwich lease option, the investor exercises their option with the property owner to purchase the property when the tenant-buyer indicates they're ready to exercise their option and purchases the property.

I expect renovations to cost $60-70k (I’m padding in extra for worst-case scenarios, I’m conservative like that). 

.: What are you hoping to get out of the extra time, work and costs of having the LLC?

fun comps and see if cashflows. if need help on financing, more than happy to discuss your options

How much extra security deposit and rent increase is appropriate?

7% is probably good for projections, but I would ask whatever bank you're planning to go with where they're at and factor in an extra 0.25% to be safe.