Surprisingly, this property was on the MLS and our first offer was accepted.

Surprisingly, this property was on the MLS and our first offer was accepted.

You could accept these payments personally if you keep your banking impeccable and use an asset holding company, but honestly, the LLC shell corporation is easier and often offers greater protection.2.

My questions are: if I accept Seller financing eg. 5-10%, I wonder what the rate and other costs involved, and it could be high... compared to I may just borrow against my 401K so I pay myself interest and minImum cost Involed?

I'm not a Lawyer, and this is not to be interpreted as legal advice, however, here is what I see has happened:1 - Faulty Option contract made worse by Owner's actions:  Somehow, even after the contract to buy has come and GONE (my math says 2007 + 5 years doesn't include year 2018), the tenant buyer has been allowed to continue to make (and have accepted...BIG problem) payments on the Buy Contract. 

Originally posted by @Joey Isidore:@J Scott you must have quite the time on your hands.I apologize if my point didn't come across as intended...To address your question more directly:  There is no way for someone who doesn't know you, your situation, your goals, you expertise, your location, your time availability, your acceptable amount of stress, etc. to tell you which path is better for you. 

I countered the seller stating that I would like the rights at purchase; hopefully they accept.

Like @Ned Carey said acceptable risk is a very personal thing. 

If it gives you good cash on cash returns, consider offering more and accept you can't refinance all your money out. 

I pre-quality the people who want to sell their notes and then I REFER them to my own network of note investors who accept referrals and who pay out referral fees.