Unusual situation needs financing suggestions

[Christopher W.]

I’m the executor of my mother's estate, which includes an old farm house.  The house is about 10 miles away from me - so I don't think the purchase could be considered a second property (vs. investment property).  I’m currently in the process of trying to purchase her house to help my son get started in farming. He would live in the house and farm some of the land.  After a year, if he did well, he would purchase it from me, otherwise I would sell the property.  During the year, he would be paying me enough to cover the mortgage and taxes.

I'm wondering about the best way to do the purchase.  I've thought of a few things -  purchase the house myself (20% down), cosign for Steven to purchase it (5% down), or possibly use some of my home equity and/or equity of my mother's house to help with the purchase. I’d like to know your thoughts/recommendations on the financial and tax aspects of this situation.

Goal:

• Help my son, Steven, who's 23, purchase and move into my mother’s house (in East Windsor), which is currently owned by her estate

Considerations:

• Financial
• House being purchased
  • Purchase price is $170K
  • Thorough market analysis came in at $180K
  • Zillow estimate $233K
• Chris / Doris
  • Income ~ $200K
  • Credit Score – 820
  • Liquid funds - $14,000
  • Inheritance - ~$14,000 (available upon closing estate, probably a couple of months after sale)
  • Additional funding could be procured if required
  • Primary residence valued at $400K with $250K mortgage

• Steven
  • Income - $0
  • Credit Score – 755
  • Liquid funds - $20,000
  • Minimal prior incomes – summer work
  • Currently in Peru until March

• Steven's LLC
  • Both Steven and his cousin are ‘members’
  • Newly formed farm
  • $75,000 loan obtained
  • First payments due in 2019
  • ~$20,000 startup cost (bulk of equipment is available to him at no cost)
  • Experienced, long-time farmer providing guidance

• Post-Sale
1. Steven would live in house
2. Two or three acres would be farmed
3. After a year, the house would either be sold (if the farm didn’t work out), or purchased by Steven
• Desired
1. Minimize mortgage / taxes for first year
2. Minimize down payment, ideally less than $14K
3. Avoid liability exposure on property if any farm workers sued

Any suggestions or thoughts would be greatly appreciated.

Thanks.

Chris