@Nerissa Marbury Unless the damage was extreme this sounds like an exercise in futility.

HIGHLIGHT it and say you see no reason for them not to be out as per their original plans,, that the new tenant has said they need access and can not be delayed.. and if they want to risk the legal issues of this portion of the lease you fully intend to exercise that option, and here is the Notice of Lease extension per B on their lease agreement.. 

All that is fine, I'm just looking to fill in the blanks from there on - which lenders to look at, likely interest rates (ball park) and if they'd touch me at all.I have about $450,000 cash for the sake of this exercise, so I was thinking 40% lend could have me looking at assets up to $750,000.

Management company #2 had never been in the property.Although the tenants are at fault for the way they treated the property, it is my belief that the management did not exercise diligence through regular inspection.

But since I'm having to put a new roof on it right now I asked them if they'd exercise their next extension option right now, and they replied that they only would if I agree to keep the rent the same ($4500) instead of have it increase to $4880 like it's supposed to.

Would love to gather the inputs of as many who have gone through this exercise as possible - maybe you've changed your flexibility over time or maybe you've gotten burned when you did?

It was my understanding that these are always negotiable and sometimes the landlord can't always exercise the full the rental increase but sometimes can only get partial. 

So you, as the owner/ seller is obligated to sell to the tenant/buyer if he exercises his Option to buy.

This thread was initiated not to agree on the best return metric but as an academic exercise to enable me to understand why the annualized return (IRR) goes down over time for a subject property I was analyzing. @ Stephen Greenway correctly explained that the decreasing irr comes from holding the property and averaging more modest and sustainable cash flow returns over the long haul bringing down the initial "flip" return. 

Now, as far as a lease option, in Texas, your buyer has only 6 month to exercise his option to buy, after 6 months the rules change (do some real research and find out the laws on lease options) the buyer could demand all his down payment money and all the payments back from you.