Parents looking to downsize? Buy their house with owner financing

[Randy Walters]

Hello BP, I'm fairly new to the community.  I had some questions pertaining to owner/seller financing on your parents home.  All the other forums I found simply spoke to "why you shouldn't rent to your friends/family" so I felt the need to start a new topic.

My mother is living in a house that she owns free and clear, all of the kids have moved out, and she is looking to eventually downsize. Is it smart for us kids (either one or a group of us) to consider purchasing the house since it is paid off?  I remember listening to podcasts somewhere discussing the benefits of owner financing on both sides.  I have been researching buy and hold strategies and I think her home would be a good addition to my rental portfolio once she eventually vacates.  I tried to compile some of the benefits for each party, but I'm not sure what the downsides are when conducting this type of transaction with family.  Please feel free to weigh in on these, expand on them, or correct any of these if I'm missing any unforeseen consequences.

Pros for buyers (kids): keeping the home within the family, determine own financing terms, gives mom flexibility to downsize when she feels ready, no loan costs, keeps real estate agents away that are pushing her to sell before she's ready to earn a commission.  I also live out of state, so this could be a tax write-off for future travel when I fly back to check on the family/house.

Pros for the seller (mom): fast closing, more tax savings upon sale, gives her plenty of time to find next property on her own timeline, monthly passive income from the transaction could fund rent/living expenses at her next property.

Some scenarios I hope I won't have to deal with for many decades to come:

What happens if me, as the buyer, dies?  I've heard some buyers take out a life insurance policy up to the amount of the purchase price so if anything were to happen to the buyer, the seller (mom) would be the beneficiary of the policy ie: the full amount of the house.

What happens if mom passes away?  Who then is owed the monthly payments from the purchase?  Surely it isn't just wiped clean. Would I then make payments to her beneficiaries (which may be the surviving siblings)?

I hope this isn't too all over the place but I just wanted to get some thoughts out to the community on owner/seller financing on your parents owned home.

Thanks for reading, look forward to your input!