The previous owner said they expect they will have no other choice but to foreclose, and they have no experience with doing that.I also went to the town hall and checked, and yes, the property taxes haven't been paid on the property either, starting with 2015.  

I can think of a whole host of 'USPs' pertaining to WHY one might want to consider a 'lease option,' vs. simply because they have no other choice!

Your choice of areas to invest puts into a very expensive and competitive market, (Yes I am stater of the obvious).

Which is a better choice?

I got into investing as the guy who moved and had a choice to make.

I agree Investing in local market will definitely be a less risky and more manageable choice.

My thoughts on this is that it totally makes sense to make the improvements and go for the higher rent, but he is a very good renter and I know what to expect with him.I think if I get an answer to question number one, I should be able to calculate my ROI and answer number 2 myself.For major repairs it may be that you don't have a choice but to "back it into cost basis" as you say.

Can you tell me about your property in Burnaby and why it was a good choice for you?

When you have a choice of paying the bank back now or later, take later.

It is your choice how to spend the money.