My husband and I are in our 20's, are new to investing and have been exercising our minds and ultimately learning more and more everyday. 

65-70% of after repaired value, minus repairs is a good exercise to start with.

If the buyer chooses to "exercise" their option and buy the property, the option money is typically applied to the purchase price.  

He makes it sound so easy and can be misleading to people who aren't experience in the RE world and some serious financial damage can be done if one's not careful and exercise industry good practices in RE transactions. 

I run my students through this exercise and it is called the Investor Avatar or said another way, what does your Ideal investor look like?

The return on a property from 90k-150k in Memphis isnt that drastic. it might be a good exercise to see what a slightly lower valued home can get you.

A good filing will definitely be a CYA exercise.

Many places won't do controlled burning exercises anymore due to the unknowns being released during the fire, lead etc. thank the enviro nuts for that.

I need to (1) tent the property asap, (2) do landscaping to remove trees that are damaging to the roof, (3) take measurements of each unit so that I can begin plans to remodel, (4) determine whether to exercise the kick out option or do a novation on Tenant 1.  

Cons : Seller  could POTENTIALLY put the house under water or make it non-transferable should you chose to exercise an option or eventually purchase the contract.