I show it, I let them know my criteria, and I leave the ball in their court.Another favorite of prospective tenants is to submit part of the application.

The longer you wait, the more the seller thinks your emotions are entering the picture and that they can negotiate.Possible future:1 - You back out and move onto next deal2 - Seller realizes you are serious, and makes the property right by the contract3 - Seller "takes their ball and goes home",...then when the realize-     a)  The property won't sell in its current condition at the same price     b)  The seller will need to get (pay for) the property back to "sell-able condition"     c)  The seller realizes you may be their best option still, and comes back to you to see if you are still interested...which you are NOT...at the same price as before (even if they fix it), or at a reduced price (if you have to fix it). 

You lease the property for two years, create bank ready financials and then exercise your purchase option with a sales price of $800k. 

All of us would love to have a crystal ball and be able to predict what's coming, but we can't.

I got thrown a curve ball this week.

Hi Keith  typically this is a lease with and option to purchase two separate contracts.. and yes I believe that is correct.they have a strike price at 100k house goes up to 150k over their lease term they exercise their option at 100k and keep the delta.. 

Clearly, I have very strong reasons to pursue this change, but for the same reasons I must exercise the utmost prudence (without compromising the call to take some risk).

My point is that a ball that looks like a home run ball could just be a pop fly. 

It sounds like you still ended up with a good deal, and you signed knowingly.Let's do a thought exercise: pretend you haven't signed and the deal is before you.

[More math, NOI=Rev-exp, if exp=55% of rev, then NOI= Rev-.55 Rev or Re=NOI/(1-.55) ] Reasonable minds can differ about the DSCR and expense ratio by asset class, but it gets us in the ball park.