Or even worse, doesn't bug out and drags you through a lengthy and expensive eviction.When doing an evaluation I simply look at the 50% number and use that.

Sorry it is kinda lengthy, copied and pasted...OVERCOMING RENT ADJUSTMENT OBJECTIONS I’ll sign a lease if you only give me a $5 increase.

So I'm not sure what about the OPs post made me wonder about making sure the loan was arms length. I

My last message was pretty lengthy, and I apologize for that, but to answer questions thoroughly, it's necessary.

Any examples I'm familiar with, whatever you get upfront on one of these deals, is that last money you'll ever get from that tenant, you'll have a lengthy & costly eviction, and end up with a trashed house, with several months of uncollected rent.

This will be a lengthy post; I apologize in advance. 

You can certainly prorate this, but you will need some pretty lengthy disclosures.  

The only resources I've found are Fannie/Freddie guides that are very lengthy yet unclear in certain regards.

Ryan, there is no statutory form requirement for sale of real property in CA.The rather lengthy explanation from the young man taking law classes fails to correctly answer your question.

However, most buyers want to lock in the future purchase price upon inception of the lease option.During the term of the lease option, the buyer agrees to lease the property from the seller for a predetermined rental amount.The term of the lease option agreement is negotiable, but the common length is generally from one year to three years.The option money generally does not apply toward the down payment.A portion of the monthly rental payment typically applies toward the purchase price.Option money is rarely refundable.Nobody else can buy the property during the lease option period.The buyer generally cannot assign the lease option without seller approval.If the buyer does not exercise the lease option and purchase the property at the end of the lease option, the option expires.The buyer is not obligated to buy the property.Basics of lease purchaseBuyer pays the seller option money for the right to later purchase the property.