The best way to avoid any future ugliness is to make sure up front that all parties (including seller and tenants) are crystal clear on the terms:Due Diligence Period (DDP) - I'm sure your contract specifies a period during which you can assess the home and then decide whether you wish to move forward.

They have an option period, say between the twentieth and twenty fourth month of a two year lease to exercise their option and purchase the home.

This is a formula for a neighborhood moving into distress appreciation slows are stops and values decline.A good target market is in an area that is still in its growth period, demand is stable or growing.

Were you cash flowing during the hold period? 

My long term goal is positive cash flow as I intend to own the home for 30+ years and appreciation discounted over that period of time makes very little difference to the return I make; it's more about the rental income compared to the total cost of the house for me.  

In most cases, they just don't trust the investor.What are investors trying to accomplish with "buy like rent, lease option, option", In most cases it is to BUY TIME to find an assignee or to flip the property.Here are some ideas you may want to try on for size:Write a contract of sale (I use a skinny contract, one that anyone can read and understand in a few minutes) with a delayed settlement (for as long as you can negotiate), with right of possession or if occupied right of entry), and "subject to the existing mortgage"Skinny contract of sale with a Study Period, with right of possession or if occupied right of entry.Make full disclosures 1.

I have a pretty short inspection period and it is a holiday week, so hopefully either Marc or Kibbe will be available early this week.  

For the sake of discussion, let's say that your future investor would pay $250k in today's dollars because he knows it will be nearly worthless by the time he comes to sell.Now you have to figure out how much money you have to make over your ownership period for the investment to be worthwhile.

Usually over a 10 year period I see a top and the bottom when most areas fell in 2007.

If you sign a contract that you do not fulfill you are subject to claims against you......period!