hi chaim. i have not bought any houses at a tax sale. i have however, bought a few after the tax sale. here in erie county new york, if you buy from a tax sale, it can be a great deal. however, whatever was left on the past due taxes, you now owe. hence, you just bought yourself a liability. i don;t know about anyone else here, but i can manage to create my own bills myself without buying anyone else's tax liability. so, watch out for that issue. it may just be a new york thing, but maybe not. one of our local municipalities here has their own tax sale auctions aside from the county. that one, if you buy from them, you get a clean slate, no past due taxes left. however, they like to start the bidding out at what was owed to them, so, there would be no " leftover" anyway. by the way, they sell very few of them. lol. i usually go back to them after the sale and offer to buy some of the " left over" properties, usually for pennies on the dollar and i get them. you think they would figure out to start the bidding low if they are gonna sell them cheap later on anyway. but, regardless, even after i buy them dirt cheap, i still get them with no left over taxes owed. also, you need to know if your state is a " redemption" state. i. e., can the owner come back later and redeem their house by paying the taxes?

Surely there will be expenses (cleaning the house, making repairs, changing lightbulbs, etc.), but how large exactly are these expenses?

I loathe getting my spring clean up bill from my PM, it's alway a couple hundred bucks and, while necessary, annoying.You'll want to start as close to the 2% rule as possible, so about $85k this place would be a steal.  

I figured I have nothing to lose but time, and by seeing my great work ethic, I may be able to establish a great relationship with the investor and could grow into an eventual partner.

Making sure they are really clean is extremely important.

I admit, I have done a few deals without coverage, but I also knew the properties very well, knew the factors associated with the title, knew they were clean without any construction or other matters that could be the basis for any claims, and, I was willing to accept the risk (self insure) my period of ownership.

It takes two years of established income to begin count it.

You have to establish relationships with them and that can take time.Give us some numbers on the house.  

The appeal of a lease option, is ideally selling it to the first tenant so that I don't have to worry as much about them moving out and having to touch up paint, clean or replace carpet etc as well as market it vacant vs cash flowing.Is this actually a bad idea?  

Find something that needs paint, carpets, landscaping and cleaning, if possible.