Any issues with this deal?

[Shane Goodlett]

I have an opportunity to invest in a home for use as a home based rehab business. It’s set up perfect for them. Has 3 bathrooms with 1 being handicap accessible and 4 beds with option to convert a 5th room into bedroom. I would just be the Landlord they would rent it from me. Zoning has already been checked out. Any other concerns renting to a rehab business?

Deal

300,000

20% down

6.62 rate with my credit union if I do a 5yr balloon 25yr amortization.

With taxes and Insurance and maintenance set aside I can cash flow $800 a month at lease terms of 1% of purchase price. They want the option to buy once business grows.

1. Would you do this deal?

2. would you do conventional at 7.5-8% instead of commercial with balloon at 6.62%?

2. What language would you include in lease for option to buy? I.e. would you make sure they buy at a price point that has a minimum amount over original purchase price?