Is this a common practice and if so does anyone have a sample contract I could view?

I do this all the time in my practice. 

@Lynn Currie, we are looking to do it for practical reasons upstairs in this house but I would like to have it for solely aesthetics reasons on the first floor. 

Practice analyzing properties for rentals and you will soon learn to recognize a good purchase.

No regulatory violations for usury, disclosure, predatory practices (like inflated property values) amongst other ideas are common highlights.  

My credit took a hit in college and right after college (defaulted on student loan).

Are you held to any other standard or practice that makes you liable?" 

However, practically, if you record a memorandum to protect your potential buyer's option it will show on a title search and it may make it more difficult to find a lender who will loan the funds.If your tenant buyer is well qualified they could exercise their option at any time.

Degrees are great and college is great, don't get me wrong, but it is not everyone's cup of tea. 

I drafted up some contracts and had a attorney that practices in my state look over them.Best of luck