I had a default clause in the note and recently exercised my option to collect. 

Not purely as an investment but also an exercise for my design and construction muscles.

There is nothing crazy about buying a $200k home for $175k(no agents) and selling it for 225k on a lease option and collecting on the spread by Option consideration, cash flow(not needed), and cash out when the end buyer exercises his/her option.

If you decide to exercise this option the seller MUST sell to you at $120k, regardless of the true market value of the property at the time.

You will generally give up most or all of the Option fee (Which you would still have to credit the buyer as part of the down payment if they do exercise), but it is the same as a rehabber paying for the wholesaler to find them a property that is locked up.

That's an interesting exercise to try to understand how you'd calculate COC return in this case.

No Party shall be deemed to have waived any provision of this Agreement or the exercise of any rights held under this Agreement unless such waiver is made expressly and in writing.33.

I know the Cali market is high, but what's concerning is they are using this a learning exercise.

Most people are broke , Most people don't have successful businesses , most people don't exercise - I would rather substantiate with sound rationale why it might or might not be a sound business strategy for you .I wouldnt comment much on your statement regarding contractors willingness to work with new investors , as you seem to have made pretty broad generalizations of investors not knowing anything and not knowing how to buy properties .

If from the above exercise , you find contractors who you are satisfied with , then catch them, pay them well , respect them  and your life will be much easier .