I'd rather be in a market where supply has gone from 12 months to 9 months over the past quarter than a market that has gone from 3 months to 4 months in the same period of time.  

Questions: Seller proposes to value the house at $85,000 and charge 5% interest for the first year, and incrementally increase the rate to incentivize the refinancing. 1) Is it likely that the buyer would be able to refinance within a three year period given his credit situation?

Typically, they pay 8-10$ interest for a period of 6 months to a year.

I think you could sign a year lease, but it doesn't guarantee that the roommate will stay for the entire lease term...

That 5 year CD I mentioned would hopefully beat out inflation by about 1%.As to how to structure the deal, why not do a cash out refinance after 3-5 year period and pay off the investor(s)?

Depending on your house value, you can keep it and benefit from the future appreciation (remember, this is not guaranteed) and use the equity you have in the property to buy cash flowing investment properties. 

The incentive for investors is the deferral of capital gains taxes in stages over a period of years. 

Can I get a longer than 20 year amortization period?

Put that on the contract with maybe a few days grace period and if you still have attorney review then that can always be changed (but both parties will have to agree to it).- As-is - This is another good option if the property isn't being sold as-is already.

Assume 1 month vacancy per 13 months (deduct 1 months expenses) Assume make ready costs of app $2,000 per 13 month period (paint, cleaning, carpets, etc..)$1200- is that for repairs, etc...