Model Leaseback - First Rental Property - Advice Wanted!

[Travis B.]

Hi BP Nation!

My business partner has an opportunity to purchase a model home investment leaseback from a local builder. The builder will lease the model home back from them at $1950/month. The rental agreement will be a 12 month term that is renewable at the builder's choosing. Typically they end lease when the community is sold out (2-3 years). Details, costs,  and questions below.

Sales Price = $260,000

Square Footage = 2100

Nashville, TN market

1) Would you pull the trigger on this investment? 

2) What type of loan product/lender would you recommend? (I was thinking an ARM product because they plan to sell the property once the builder ends the rental agreement.)

3) What type of legal entity should they put the property into so they are protected?

4) Any other advice would be appreciated.

Thank you!