I was their best option.

My view is there is more protection on a wrap than a sub to and with the right disclosures and underwriting can be an alternative option. 

Then look at your options. 

It sounds like you are in a nice spot where you have options moving forward with investing, (congrats).

Your options are greater ahead of the transaction as opposed to when the transaction has already been entered into.Best of luck to you!

Buying a turn key rental, in an area you know or knew well, with a property manager you've met and trust, in an area that is large enough for you to have other options to find contractors and property managers? 

Don't be so quick to indebt your paid off townhome until your learn creative financing and review all your options.

Quote from @Patricia Steiner: There are several lenders who offer low/no closing cost options for first time homebuyers.

We have three potential options.The first option is for me to completely owner-finance his purchase.

The best option is to respond quickly and professionally in hopes that they move out.I would give the tenant two options: 1. vacate the rental in one week, leaving it in the same condition as when they moved in, and I will refund their deposit within 72 hours; or2.