Otherwise, you will end up loosing your property to the tenant.

Sellers need to feel they didn't loose.

I wanted to cover a couple aspects and see if anyone can help tie up loose ends.

Also the lack or higher risk factors will be noticed more and you will loose some buyers with higher wind risk.

He took them to court and lost so for several years this place has been without any HOA.I pay my own taxes for my part of the building and land so I'm not in risk of loosing it even if the other people don't pay their taxes.

I also use a score sheet as part of my screening process and if you are late then you loose a point. 

It can be as little as $1 or a really substantial amount - typically a similar amount as earnest money.With an option you know that you will be able to buy the property as agreed and the seller doesnt have to worry about finding another buyer, as they have collected an option fee you would not want to loose.

It's a small initial cost $5k I'm not sure it's allot to loose the place will cash flow at close to $2k a month once rented so worst case scenario I make my money back once or twice and then loose a friendship. 

You can loose ALL the asset of one LLC, but the concept is to avoid propagation to the other LLC.

I want to be prepared to answer any objections like avoiding a huge tax bill or loosing his monthly cash flow.