If your buyer decides to exercise the option and then your seller doesn't go through with it, you're probably in for at least one and potentially two very costly court cases.

It's basically locking in a purchase price and a time frame in which you can exercise your option to purchase the property. 

In the lease your going to want to be able to sublet In the option your going to want some or all of the rent to apply to the purchase when or if you exercise the option to purchase.and in the purchase contract you going to want the best deal you can get Why not do a Sub2?

I am setting aside reserves so that when it happens, I am not in a pinch.Even though most landlords use cash accounting vs accrual, it would be a good exercise for every one to brush up on their accounting.  

However, I have a prime opportunity to exercise the drive for dollars strategy while working, because my job consists of me driving around the city.

Trying to balance risk versus reward versus active participation limitations from a couple oceans away, etc.Lending does seem like a fairly hands off exercise (at least when using a broker.)

wow Bryan, way to bring back an old thread :)I do not give them anything back when they go to exercise the option.

I noticed that too, but the whole exercise doesn't add much value IMO anyway.

Take the gross rents, divide them by two, divide that figure by the asking price, and that will be a good screen test for whether or not the 10% figure is close to accurate.If it still seems like the capitalization rate is okay given your metrics and how it trades relative to other properties in the area perform a much richer due diligence exercise.

It's all about actively telling yourself to take a long-term perspective and chomp away - one bite at a time (easier said than done, but  a great exercise nonetheless).