Some People don't like committments, and they prefer the comfort and flexibility of having choices-- even if they don't exercise them.

It's also so nice to hear from a person who did this exercise and it's been successful.

For that exercise, I take the conservative approach and underwrite CapX above the line, assuming the worst-case scenario that a buyer underwrites that way and if the price goes higher, that’s just a bonus.  

Also, their podcasts are great when you are driving or exercising to listen to!

However if you have an ownership interest in the property then I think that the law you mentioned may not apply.You’d have to ask an attorney but it might be possible that if you had an option to buy the property at a certain price then it would be sufficient interest as (in theory) you would be protecting your potential future property (if you were to exercise the option).In practical terms I’m not sure that the law you mentioned is aggressively enforced; i.e., there are probably many unlicensed people who manage other people’s properties in RI every day of the week.

It is a little more risky though since it is possible that the tenant might not exercise the option.

Person has contacted me as a hard money lender to exercise the LO and purchase it outright. 

And once you find out what that rate cap is, you have to understand if the deal was underwritten to that rate.If the deal doesn’t work at the maximum rate allowed in the cap, then the deal doesn’t work.Debt TermsAnother aspect of the debt that investors should understand is the term of the loan.Forced sales are another big item you want to avoid at all cost when investing, if there’s a balloon payment coming due within a few years, we want to understand what the extension options are for that loan.A popular format might be 2 + 1 + 1 which means the initial term is 2 years with the option to extend for 1 year twice.There are typically fees associated with exercising these options, but the fees are significantly cheaper than being forced to sell when you or the market isn’t ready.Having rate caps, underwriting the deal to those rate caps and confirming they still work, and having loan extension options are 3 things that great operators should put in place to prevent catastrophic deals, and something you should vet for as an investor.

My hope is that after this exercise, I'll be able to make an informed, comprehensive decision where to focus on more detailed property level analysis. 

We are just trying to exercise our options & do our research.