Helping out a tenant?

[Jeff B.]

I have a pretty unique opportunity that I'm having a hard time saying yes on. I have a tenant that has been an "OK" tenant for a year. I say "OK" as they have been late on their rent, but have always be very forthcoming about it and have paid the late fees and/or bounced check fees (3 times in the last year). They have had some health issues that have been at the root cause of the late payments. The wife has a pretty decent job and the husband is on disability. They have had their daughters living with them for the last year and are now moving out. That leaves my tenants unable to afford the $1000/mo rent. Their credit is messed up and can not get a loan for a home of their own, but are slowing working to clear up their credit.

They came up with the idea of having me buy a house they they pick out and they rent from me for a year, then they buy the house from me. Either via a conventional loan or I finance it. I agreed to the concept, but told them it would depend on what the return on my money would be.

They have found a house that they like. It's a short sale priced at 66k. It is in good conditon and comps are coming in at about 78k. Rents in the area are in the 800-900 range. I would probably rent it for 850. That would give me a net of about 350/mo after PITI but before any long-term expenses.

They are asking me what price I would sell them the house next year and I'm not sure I know right now. There are just too many variables that might crop up over the next year to be able to agree to a price right now. They want it close to the original purchase price and I, of course, will want it closer to market price. My fear is that I will need to put more money into the house (i.e. water heater, furnace/ac, etc) that will eat up any kind of profit that I might have.

So, finally, a couple of questions. Is it realistic to put a price on the house now that it would sell for in a year? Also, does this even sound like a workable deal? I see the potential for a little profit, but it certainly doesn't seem to be a slam dunk.