Even at a good discount off of list price, it's tough to get down around $100K.I realize the 50% rule and 2% rule are just guidelines, but most SF properties I look at are coming in at a 6-7% return when I run them through an analysis calculator.  

The core question it seems is straight forward, so I am going to skip over some of the confusion of who is who and who is saying what and what they said.The lease option contract is treated like a rental agreement.  

Those mortgage companies are buying those notes at steep discounts that account for the risk they are assuming.  

At first glance with the 1% rule of thumb, it is listed at 97k, so if it doesn't rent for over 1k then you need a big discount or to keep looking.  

Buy the mortgage at discount and reduce the payments.

@Paul Clark I guess I need to find out if any schools offer night/weekend classes instead of a week straight.

This house is being at such a discount that even if it cost me 10k it would be worth It. 

If the answer to both of those is yes, then there is no reason you shouldn't move straight into buy & hold.

The secured debt is paid at 100%, the unsecured could be paid back at significantly less than 100%.Chapter 7 is straight bankruptcy. 

So we have to post corrections to keep things straight.