It's a great way to let your appreciation work for you provided the numbers work out.  

This may or may not work out for the parties but it would certainly be a good faith effort to help them.If on the other hand you are looking at this as an opportunity for you individually to make a profit, I would say that without a track record doing development and/or a good sum of money to invest you will not be of much value to the group.

If it doesn't work out, a legal mess awaits.  

Rents are routinely 950-1050 on these sized homes. 

There are several variables here I have yet to work out, such as, the exact working in the Note (I want 50/50 profits, you may want to pay only interest), when exactly to record deed of trust (if you record deed of trust prior to recording trustee's deed I doubt it would rise to the level of being a lien), do I give trustee's deed, note and deed of trust to my escrow agent and get a lenders title policy thereby insuring the lien and allowing me to possibly sell the note.  

Besides, using a line of credit on a routine basis would create a headache of tax calculations for the IRA when calculating UDFI.

I'm sorry that it didn't work out on that house in five points for us but keep your eyes open and we can compare notes. 

Hope it's starting to work out for you.

If the tenant agrees to this, it might work out.

So theoretically, if you could convince the seller to consider that as the downpayment, it might work out.