Seller Finance / Wrap Around vs Rent to Own of SFH Rental to Acquaintance

[Jenny Poon]

I have a SFH with a 3% interest rate, worth ~230k, have 53% equity.

In Georgia, but not Columbus (can't change city after selecting it).

I brought up the idea of seller financing, specifically a wrap, to an acquaintance in the area. They were highly interested and have already spoken to a real estate attorney. 

I had been planning to sell next year when there aren't 5 other homes in the area, including neighbor, selling with days on market >14. However, I believe a wrap or rent-to-own could be a win-win for both parties (but also a lose-lose). 

Lived in property for 2 years and currently rent out, but tenant is leaving soon, and do not want the hassle of dealing with new tenants and home repairs as am no longer in the area. Cash flow margins would be eaten up if a property manager was used. This year's repairs ate up a whole year of cash flow. 

No problem with what the property is worth now and willing to cash out if local market was not so difficult. Also want to take advantage of capital gains exemption. Acquaintance has no incentive to take out a mortgage with interest rates as they are. They are looking to either keep it as a rental or occupy and rent out their current property.

I understand the large risk of buyer non-payment and activation on due-on-sale clause. Would like to see if anyone can share examples with numbers on a wrap contract vs rent to own. 

- Does opening LLC or Trust and transferring property to that make it a cleaner transaction? Or does it tick off the bank?

- Would the contract for a wrap be a land sale contract? 

- Should a personal guaranty be included in contract to cover risks for seller?

- How large of a down payment to request to request from buyer?

- If deal is for 24 monthly payments at interest rate of 4.5% with an added portion going to principal followed by a balloon payment / payoff by buyer taking out mortgage, what happens if they cannot take out the mortgage? Would I need to reach out to attorney to foreclose on them? How does that impact the seller's 1st position mortgage / bank?

Have read several articles and watched videos on these scenarios but have not seen the mid-to-end part of the timeline where buyer pays off.

Rent to own seems much simpler. However, how to make it more enticing for the buyer since seller has the strong hand vs a wrap where the title transfers to buyer's name and seller takes on much of the risk?

I have scheduled an initial consultation with a real estate attorney for tomorrow. Looking to see what other considerations I have not taken.