Why is it that nobody actually provides a constructive look at the scenario as opposed to just chanting "fire the PM" when there is clearly not enough information to determine the root cause of what's going on here.For example, let's talk about the most obvious statement of scapegoating.

If the terms were payment over X-yrs +/- down payment +/- interest you’d determine the monthly payment and then subtract that from market rent and that would be the payment she’d give you each month.

I am trying to determine how lease option up-front option fees are taxed.

This market phase has made deal-finding much harder than 5+ years ago, but deals are still out there.I find it helpful to determine who you are targeting (maybe a certain type of distressed seller), and consider where their eyes are.

How do they determine how much you can get from a HELOC?

The purchase price is determined by cap rate.

Then use your cap rate equation with the local cap rate and new NOI to determine the purchase price.

All that being said, I think for a scenario like this in which you were interested in putting in a offer,  I would not rely on the 50% rule to determine expenses and do a line by line item expense analysis based on historicals (from a T12 provided by owner) and the "proper" expense base.

By using "D" you can quickly determine if it meets your "D" threshold or not. 

Provide the COI to your qualifying lender and they will determine your down payment if any.