They have an annuity income, secured by a property they know well.Do not pay more for the property for financing, financing does not add value to a property.Search for loan servicing and select a servicer to administer the loan.

Annuity income being better than a lump sum;If they were to get the lump sum, where are they putting that money?

Hey Sharad,Agreed that this is something anyone doing lease options needs to understand (or notes or any other type of investment that generates an annuity or cash flow). 

Sell your offer from the benefits to the seller, a higher interest than they may otherwise earn on similar investments, an annuity income as they had with rents, tax advantages of deferring gains on the sale, add professional management of the loan with a loan servicer to make it hassle free and it will be more attractive, much safer for you too.

Quick background: I have great day job, and high-pay profession, on track for retirement, but when I almost bought a deferred annuity for $550k (starts paying around 40k/year in 12 years), I realized - wait, I should buy rental properties with that cash instead!  

The amortized interest from the original note is irrelevant to a note buyer.Look at you instruction book for your finance calculator, buying a bond at a discount and computing an annuity.

I'm thinking of folks who would otherwise be buying annuities.  

I’ll be around 1.2 million in just contributions into my pension and annuity, not counting raises.

Are you saying you would rather OF your properties in retirement rather than selling for cash and migrating your portfolio into an annuity?

Does anyone know if you can 1031 exchange an annuity into investment property/business to avoid the 59 1/2 penalty and taxes?