They can only exercise the option if they are occupying the property within the 3-year period of time.

This will obviously take more effort on your part but in the long run, the exercise will be a valuable lesson for future calculations.

Account Closed In that case, the option fee would not be taxable until the option is exercised or expires.

State by state is going to vary, but general rule: if you still had contingencies intact, you should have every right to exercise those contingencies.

@Wynn Williams You could buy it subject to the existing mortgage, but I'm hearing about those due-on-sale clauses being exercised often now.I would structure it as a lease with an option to buy.

This is a very fluid exercise and SHOULD be done frequently so that you know you’re making progress and can shift your goals as life develops.

The rent to price ratio is an interesting artifact of this exercise, but it doesn't tell you if something will be profitable. 

It's like asking whether you can lose weight if you don't exercise.

In return I get a lower lease with a 5 year term before I could exercise a purchase option to protect my investment. 

I rarely exercise this clause unless it really is bad.