For me it's more about getting exercise while gaining more experience with different types of repairs which will be helpful in the event that I run out of money to pay help or if I feel a need to speed things along.  

I've been a commercial broker for 30 yearsFor a credit tenant, If the primary term is 15 years (with no options to terminate) then the following is market5% for yrs 1-5 plus 3% for yrs  6 - 10 plus 1% of remaining term.Most brokers ask to be paid on options (if and when exercised) and expansions, but really dont expect to be paid on them.

You had better ensure that you can carry the mortgage in 3 years, as you can be rest assured that if the price of oil does not go back up, they will not likely exercise their right to renew the lease again.  

Wold love to hear some insights from investors who have gone through this thought exercise.

His part of the deal is to follow the lease provisions, pay the rent, and exercise reasonable care toward the property.This other stuff is, frankly, none of your business.

If you can do any of the above you can increase NOI and force appreciate the property so that when you exercise option,  their will be enough equity so that you can refi with a commercial lender, pay back owner, and have little to no $ out of pocket for dp.

I find that after a bank gets bigger their capital controls and restrictions make it less likely for them to be flexible on make sense underwriting since they are under massive scrutiny from regulators depending on how many assets they have and other financial ratios.I do want to make a note though that I've talked to general counsel at my bank and cannot speak for other banks out there but if title is funded in your name and you transfer it back into your LLC with out any change to owner percentages (100% you personally to 100% LLC) and if the note is paid on time that we "most likey," will not exercise due on sale (DOS).

You want to do an option because options are taxed once they are exercised (or on the backend).

By putting a premium on the amount of DD money in the offers, the owner is obviously trying to bind the buyer and prevent from exercising optionality and tying up his property during diligence period.Your advice about getting a GC in there makes complete sense, especially given a building is completely down and that the complex that has been neglected. 

He pays me a non-refundable option fee ($2000) which is credited at closing should he exercise his right to contract at Y date.