Them exercising the option is icing on the cake, and it depends on how you structured your deal: How much margin is there between your price to purchase the house with home owner, vs price for your tenant buyer to buy the home from you?

Second only to doing smart tax planning, I saw this as making the greatest improvement to my margins and return on investment.Some people are also their own handyman, title company, mortgage broker, etc.

Often, what happens is that you put in new paint and carpet, but now the marginal kitchen and bathroom really look lame.

They are making a thin margin expressed in percentage terms and they keep repeating.If you build a buyer list of wholesale buyers and they are all retail buyers they best you can expect is they might get one deal done with you.

What would be a good offer and/or profit margin for his HUD home?

My initial thoughts are, if there's such a large margin in the deal....why is the seller selling?

Many of them missed the mark, or if they hit the expectations, their margins were less than anticipated.

Doesn't leave much margin against the inevitable issues that crop up, though, so I think I'd tend to stay at a lower purchase price.You do get free living space for a year.You want to avoid it becoming "your house" and letting your own tastes have too much influence over what you do.A risk is that the market may be very different a year from now than it is now.

Landlords don't have a very high profit margin, and what profit they do have it can't be spent hunting down the bad apples.

Getting a 10% margin on a property here in Los Angeles is totally worth the effort.EDIT: I meant to add, in most places ~65% is pretty unrealistic.