Analysis on a Purchase with creative financing

[Paul Williams]

This deal has a lot of moving parts but I'll do my best to cover them all. 

ARV - $345,000
Repair costs - $45,000
Purchase Price - $295,000 (Cash and Owner Financing w/ 0 interest)
HOA - $50
Location - A
Schools - A+ (private schools, public schools and the top rated schools in the state)

$207,000 will be paid in cash to pay off their remaining loan. A note for 88,000 will be given to the seller. They will have the right to stay in the home at a reduced rent - $1,600 will come off the loan every month they stay in the home and they'll pay $400 cash to cover taxes, insurance, and hoa). If they stay in the home for 4.5 years the loan will be paid off and at that time they'll have to move out. 

If they ever decide to leave the home before then, the payments will be on hold for 3 months to give time to make necessary repairs and then payments will start back at $1600/mo until the note is paid off. 

The 0 interest loan is the ONLY part that makes this deal enticing but I'd like to receive feedback to see what you all think.