Since this happened before moved in, I don't feel right about exercising that and keeping the security deposit seems appropriate (hoping I can get a tenant in the same timeline).

Just know that buyers rarely exercise that option. 

Another good exercise might be to look at rentals NOT FOR SALE that you like and estimate what kind deals they are.

Something that has been helpful to some of my clients has been to do a visioning exercise.

You can add language that says, you cannot exercise your Option for the 1st (fill in a timeline) years. 

Once sold to you (option is exercised) you would then be responsible for all taxes, insurance etc. as the home would be in your name.I hope this helps! 

Their lease is up for renewal, and contains one Option to renew, which they've notified us they want to exercise.  

They’ll be paying 40% of market rent, you’ll be paying them $3,100/mo to “be good tenants” and you’ll be out $261,000 in rent. 4) think about the “lovely good tenant family” that you are denying a place to live for $1,600/mo (20% under market) because you want this other family to live there instead.5) Try this exercise.

Potential investors, on the other hand, should exercise caution, focusing on due diligence and seeking opportunities in sectors of the market that show resilience or potential for growth.The Road AheadThe current trend in foreclosures is a pivotal moment for the U.S.

Evaluate your position and exercise your right to make a choice that suits your over all needs.