Unique Idea for using OPM

[Ben Dols]

I don't know if this strategy has ever been used before, nor do I know if it would even work.  I think its an interesting concept so I would love to hear some feedback on it.

Example:

You purchase a rental unit (lets say one that does not need major rehab for this example), for $100,000 so you need to put $20,000 down on it.

You get it cash flowing immediately and can show on paper how this is a good deal based on the income and expenses.

You go to Jeff who is a passive investor looking for diversity and a good safe place to park some money.

You explain to Jeff that he can invest with you $20,000 and in return he will receive an ONGOING 7% return on that $20,000 on a quarterly basis ($350 per quarter or $1,400 per year)  This return will be ongoing for as long as you own the property, and upon Jeffs passing he would pass this investment down to his children.  The only way that jeff would receive his principle back, would be if you sold the house whether that be in 5 years or 20 years.  

Lastly Jeff could feel a bit more safe in this investment because you are putting his name on second mortage, so if you did not live up to your end of the bargain Jeff would own the property and could make his money back by selling it (+ a little more possibly).

So my question is: 

Does this make sense for me to do?

Is this legal?

Would an investor be interested in this because of the fact that it would take them a very long time to earn the principle back?

If not, would they be interested at a higher % return rate?