A more accurate description might be "rent while waiting to own".Finding a buyer/renter and executing a purchase option with them while contemporaneously renting the property to them (using a standard lease at market prices) is a way to turn a marginal rental property into a decent return.It can also be an investing strategy.  

My profit margin is the same. 

If he owes $59,900 and it will cost at least $40,000 to repair, you've got a very small margin.

We follow the south west model so we buy class A houses and than watch our margin very closely.

The profit margin is pretty tight on this one, especially when you add some of the expenses mentioned by posters above.

They are small margins but in my experience less expensive.

We follow the south west model so we are able to be succesful on tighter margins by having low vacancy, maintenance and self management (possible bc of clientele). 

Current Rents:425 a month a unit425 X 4 = 1,700 X 12 = 20,400 expected annual gross incomeLandlord paid utility.20,400 GEI X .40 ( 60% costs) = 12,240 NOISounds like these are low income units and area is marginal at these rents.12,240 NOI / 100,000 resale price = 12 capThe numbers seem to support a deal. maybe buy in the high 30's for price.

Functioning with smaller margins but also smaller expenses. 

Our margins are less but we don't live on the money.