Here are some general guidelines: Lien Position1st Position LienEquityMinimum Down Payment of 20-25% (a 30% equity to sale price is preferred)Down Payment made in certified funds and not borrowedMaximum Funding of 70% ITV (Investment to Value)SeasoningMinimum of two monthly payments already made12 months or more preferredPayer CreditCredit Score of 650 or higherNo major derogatory trade lines (No 90-180+ days delinquent, foreclosure, repossession, bankruptcy, etc.)No decline in credit since purchase of businessTermsPrefer 60 months or lessMaximum of 72 monthsNo Balloon Payment preferredCash FlowBusiness has positive cash flow1.25 debt service coverage ratio preferred.DocumentationPersonal guarantee from a creditworthy individualStandard documents including Note, Security Agreement, and UCC-1 filing.Tax Returns on the business that substantiate profit and loss statements.OtherPayment history current and verifiablePayer Interview indicating buyer is satisfied with business and comfortable making paymentsMotivation for selling the note is not a result of a deteriorating businessConsideration of high risk businesses or geographic areasIn these situations, sometimes a partial is a better option. 

While I doubt I'll be investing here (terrified that property taxes and the pension debt will ultimately cripple property values), I'm always interested in meeting new people.

To do this legally, I know plans need to be drawn and submitted to the Planning Board.

LLC's main benefit is from a legal perspective.

Start by talking to a cross-border CPA and attorney to handle taxes and legal structures properly.

Do not rely on it for legal advice.

Alternative is the sherif evicts him and I pay tax and insurance.I know we can have a gentleman's agreement on these things, but im still afraid he might be able to legally sue me if we have a legitimate residential lease?

For legal, we can provide you a list of attorneys out there who do this and my recommendation is to interview them to see which one you feel works best for you.

If you can purchase this home with private money or seller financing and get a $110k loan, then you could do a rate/term refi right after so do a 90 or 120 day note to secure the property and get it in your name, then refi into long term debt using the full appraised value. 

It's completely legal, very simple but powerful.