Think like a business owner or be sympathetic?

[Adrien C.]

Back in October, the executor of an estate replied to an absentee owner letter they had received in September. She was in charge of liquidating the assets for the deceased. The estate was paying her and she does not receive any percentage of sale. We met mid November to view the house. The estate was opened in May and originally the tenant was going to purchase the property. They waited months for him to get financing but he couldn't although the mortgage broker did mention he'd qualify early 2016. In November, I made an offer of $30K (She told me the house was appraised at $86K but I've never viewed the report. The ARV is around $115K). Based on earlier conversations, I knew that was in the ballpark of what they wanted for a fast sale. The tenant was going to buy around $50K. I never heard anything and followed up a few times. Anyhow, she called last week and said I could have it at $35K if I could close this month. I jumped on it in a heart beat. It's a 4/2 in an A area and I could rent it out as-is at $1100 or do some cosmetic upgrades and rent at $1400. No Brainer

The tenant wants to stay because his mom lives next door. He currently pays $800/m which is way under market value. My original thought back in November was to sell it to him for $70K mid 2016 when he has his financing lined up. However as I've thought about it, it'd be stupid to sell a 4/2 that gets $1400/month with an initial purchase price of $35K and maybe $10K rehab to get top rents. 

The dilemma is that I received a call today from the executor stating that the tenant has secured a co-signer and qualifies for a mortgage now (he got his butt in gear when he found out they had accepted a purchase agreement). She wanted to know if I will definitely close (which I intended to do). She also asked me to cancel my inspection because I am buying AS-IS. I agreed I'm buying AS-IS but I'm viewing the property again to confirm condition since it's been 2 months since I've seen it. The business side of me wants to either rent to this guy at a rent that fits the market or get him out and get a higher rent. I'd get 22% ROI at only $1100 rents. The compassionate side of me is saying I should just let this dude buy the house and stay next to his mommy. I understand in RE, it's a business and I treat my current rentals like a business. This feels different since the guy wants to buy it and apparently can buy it now. If I kick him out, it's not the end of the world for him but it does seem selfish (which I'd get over in a few months I think).

Thoughts?