Also a small possibilities the first lien holder would allow you to step into the borrowers shoes and make loan payments.All this is probably an academic exercise because if a property with an uncompleted rehab has a second lien in place of the required equity, there would be no equity for the second lien holder to worry about. 99% chance with a second in this type situation there is no equity above the first until rehab is complete, despite what the flipper wants you to believe.

Being a former physics teacher, I like to be armed with evidence.

Long Island (Suffolk County) born and raised, I currently work as a Physics teacher.

Perhaps we can try your exercise too.

Admittedly, I haven't gotten to "exploring commercial lending options" part of this exercise, so not sure how realistic is a 6.5% commercial rate. 

My knees on my pants are dirty from mandatory exercises. 49 for one pair.

To add some further color to this discussion, the exercise of a cancellation provision in a contract requires good faith, in that every contract contains an implied covenant of good faith and fair dealing. 

Had few evictions in last couple of years to hammer the need to exercise due diligence in properly screening applicants.

You need to get your license renewed, yearly physical, family emergency, sick day, vacation.

Won't the bank only appraise it at what comps are selling for when your tenant is ready to exercise their option to purchase?