Actually, it was my idea, not the buyer's. The price can't go up from here (we've agreed to a price) and he plans to get bank financing, so I think I'd need to match the bank's terms, more or less. I'd like about 25% down, which is less than I believe he had planned.
Why do this??
My original thought was to sell the property and do a 1031 exchange. I have a ton of gain/depreciation recapture and it wouldn't make sense to sell and pay the tax. I want to sell, but not desperately. My goal in selling is to pay off my home mortgage and reinvest the remainder (about 75%) in something smaller and closer to home that has a more favorable ratio of rents to maintenance costs.
As I lie awake thinking about that, I wonder if I might rather just get out of the land lording game altogether. The passive income stream from the note would be roughly as much as I'd cash flow either way, (either keeping the current property or exchanging). The differences are the taxation issues and the fact that once the loan pays off, I'd have no equity vs, if I had a property, rents should go up indefinitely and I have equity.
I appreciate anyone else's musings. I've been thinking like rothwem...being a lender is so easy, banks are doing it!.