Frederick,In a lease option arrangement, you are a landlord until your tenant exercises his option to purchse the property.

It's helpful to read the language to understand what does - and what doesn't work to legally avoid due-on-sale clauses.Exemption of specified transfers or dispositions: With respect to areal property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation,or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon— (1) the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property;(2) the creation of a purchase money security interest for household appliances;(3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;(4) the granting of a leasehold interest of three years or less not containing an option to purchase;(5) a transfer to a relative resulting from the death of a borrower;(6) a transfer where the spouse or children of the borrower become an owner of the property;(7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;(8) a transfer into an inter-vivos-trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or(9) any other transferor disposition described in regulations prescribed by the Federal Home Loan Bank Board.

To me notes are securities so trying to distinguish them from bonds is an exercise in futility.

Rent credit is the part that confuses me when talking about an existing tenant - do I "raise" her rent by including a ~$200 credit, or keep it the same and essentially take a $200/mo hit if she ends up exercising the option.Thanks!

It is an exercise in futility to attempt to mark real property to market because there is no liquid market to mark to (sounds like i'm reading Dr.

Great exercise Paul, I'll give it some thought between appointments.

I definitely get more money down, and it's not taxable until the option is exercised (non-refundable lease option consideration)or they move.

If they are particularly worried about the process and new at this, you might also give them a Deed in Lieu of Foreclosure to hold on to and exercise in case you don't make your payments.

I find keeping up with the latest codes an exercise in futility - there's only so many hours of the days and a finite amount of brain cells to dedicate to the task.

If things don't work out with your target people and you can't figure out what to do, you don't have to exercise the option.You could buy it on a wrap.