Help with Deal Structure Ideas

[Bill Wilson]

Background

I'm not a RE Investor, but I have a tiny bit of concept knowledge. This situation is a bit over my head.

Sep 21, I moved to Texas from Durango, CO, for work, I had been trying to sell our house for months, but we needed to move, so I decided to rent it or lease option it. We found a Brady bunch family moving from San Antonio to Durango who was interested in the lease option. We agreed to the terms, packed up, and got ready to leave. I drew up a 3 yr rental lease and a 3 yr lease option contract, and we signed both. When the guy showed up, he did not have the $10K option fee. He was trying to sell his two homes in the SA area but was having to deal with probate issues on both. I needed to go, so they moved in, and we headed out. Fast forward to the present, after bugging him several times, I still don't have the option money, and his probate issues still are not resolved. He has paid every month, but I just emailed him to notify him that because the option fee was never paid, he is only on the rental agreement, and if they wanted to lease option the place, we would need to void the current agreement and draw up a new one. He is admittedly upset because he'll receive no purchase credit and loses the price lock, but I explained that he hasn't held up his side of the agreement. 

Deal I'd like to propose

One of his homes in SA should be out of probate by the end of the month; he finally has a hearing date. The other, in New Braunfels, is under contract and should close at the end of April. My house has gone up in value from $490K to $590K, I owe $430K, and I have $177K in equity. I'd like him to give me credit for my equity in his SA house, which I believe he owns free and clear and is worth $390K. I would let him take over my mortgage (which is $430K at 3.125%) using subject to or some other option, and he would seller finance the balance on his house to me, then I could assign it and get my $177K in equity out now. Otherwise, I'd have to wait until the end of the lease to sell, Sept '24. He is still having credit issues, and with the higher interest rate, he doubts he could get financed and isn't sure he'll net enough to buy outright even if I honor the $489K price. They have adult kids to pay out of the proceeds 1st.

Help

Any suggestions on how to put this together? Are there any issues I'm not thinking of that could be problematic?

My Durango house LO price was $490K, and the Current price is $590K

His SA house is $390K

The equity delta is $177K to me

Thoughts?

I really appreciate any help you can provide.