What would be a fair scenario to present to our friend that would benefit both of us?

I am selling to him for a very fair price and yes I want to sell it but if it doesn't sell now then so be it.

I’ve thought about new Milford but also concerned if flood zones and further on coast closing into Rhode Island like new London, new Saybrook, mystic area I see some fairly inexpensive homes however those by water seem more difficult to find.

It's a lot like a mechanic...if they are fair, can do good work quickly, can make professional recommendations....that would sound like a good fit to me. 

What would be a fair return for the cash provided up front?

If you let the tenant know that you will handle the matter fairly and honestly, they will have nothing to fear.For the future.... it's best to do periodic inspections during the tenancy and to charge for damages as they occur or as you discover them.

So it would require an omission of Fair Market Value, absence of any authentic appraisals or BPO's, and perhaps some 'mis-understandings' about issues with the house, and various other routes the seller could take, yes?

I want to be fair, and give everyone their chance to see our home.

On my other home I would like to start the house should be permitted and looking for licensed contractors that can give a fair bid and look for long term work.  

Find out who is maintaining the yards.