Very True Dan, so many people including myself figured that an abandoned house would be an easy catch.

The lease part of the transaction should be identical to how you would do a straight rental, including the security deposit.

I have heard of new legislation regarding second mortgages that includes reimbursement from the feds to the lender on a shorted second if they sell the short to the homeowner.

I thought I would include my standard clause about the ability to negotiate the deal with the bank.

Jeffrey, Operating expenses include taxes, insurance, management (even if you do it yourself), maintenance, advertising, office supplies, legal fees, evictions, damage done by tenants in excess of the security deposit, entity maintenance, utilities (if only during vacancies), vacancies, capital expenses (not technically an operating expense), etc, etc, etc.

This should include hardie boards, 1 coat of primer, 1 coat of paint, all labor and materias, and a warranty.

It is even included in your Lease Option Agreement that the seller will not further encumber the property which means that they can't borrow any more money against the property without your permission.

I actually make more with internet poker included.

While writing up your contract, just make sure you include any contingencies like inspections etc.

Be very careful to weigh all the risks you can possibly think of, including about plan D, if A, B, and C should fail.