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.

In a nice, gentle, understanding way.

So, to wrap up, I am now looking at ways to gently transition my cousin and her kids into a new life and out of the house she has been in for the past 13 years or so.

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.