My agent has come across a home that the owner wants to sell.  It's currently rented to a couple that really like the home and would like to continue renting.  The agent says the owner wants to sell the home for $50K (its a run down property), but I plan to start negotiating at a much lower price. My plan is to pay cash and then finance the sale of the home to the current tenants.  They are paying $650 a month in rent and I want to structure my loan so that the loan payment would be equivalent to their current rent payment. I'm trying to create a win win win situation where the current owner of the home gets paid quickly, the tenants get a chance to buy the home, and I generate monthly cash flow.  This is my first deal so I need some advice on how to best structure the deal and potential pitfalls with my plan.  Here are some questions I have...

1. Based on discussions with my agent, I'm assuming that the tenants could not afford a down payment.  Is it wise to structure a deal with no money down?

2. Do I need to require the buyers to have insurance on the home?  Should insurance and property tax go to an escrow account? Are there regulations on how these escrow funds can be held by an individual party?

3. Assuming I can get the home for $40K, what would be fair terms (rate, amortization, maturity term?) for the loan assuming a $650/month total payment (including taxes/insurance).

4. How strict should I be when reviewing the buyers credit and financial status?  I don't want a situation where they can't make payments and I have to foreclose, as I don't want to take the home back.  

Thanks for your input!