Can Master Lease Option work for this deal?

[Josh Balmer]

Good morning BP! I am a rookie investor looking for my first deal. I live in Westchester County, NY with little capital/income. I know, I'm crazy. 

There is a elderly widow moving out of our neighborhood that is close to our family. Her house is unlisted and she wants our family to have the home to start our portfolio and provide quality renters to the neighborhood. She is open to seller financing. 

She is selling with the assistance of her son.

Her home is SFH that can convert to a multifamily with ease - fully finished basement with bed, bath, and full kitchen; egress, separate entrance, etc...

The deal has too much risk for our appetite, considering the high taxes and low down payment we have. 

We love the opportunity and have an idea. I would love to run it by some of you to see if it makes sense or help me find some blind spots: 

Master Lease Option (discovered in Brandon Turner's book...) 

Set a purchase price to buy within 3 years 

Owner retains title and ownership and pays taxes

I pay lease, insurance, and all other expenses

I rent out the space during the three years

Owner adds my lease payment (or percentage) toward purchase

I am wanting to present this plan to her and her son soon if they are open to a residual income for a while and if it presents as a win-win. 

Thoughts? 

[Matt Devincenzo]

The MLO can work, but why do that vs just have her seller finance with a DOT/Mortgage? The advantage of the SF would be on title seasoning which would allow for a future refi closing, vs the need for a purchase closing in a few years.

With both of these though, the first question you need to address is should you even do this deal? I assume you've already evaluated it and determined it's worth your time, but you also say it's too much risk for your appetite. So does the structure truly address that risk given the return you'd get?