A close friend and her two brothers, all retired or close to retiring, just inherited their mom's house. When I look at this house tomorrow I want to present a win-win to the owners (I've never met the brothers). If they owner finance the house, I take ownership of the house and associated headaches of renting it. It only works if they give me a lower interest rate mortgage, but they receive more income than a bank CD.

It is a single family 3 bed 2 bath 2 garage house across from a condo complex.  Probably worth about 200K. If I can make another bedroom and rent by the room I can get 3000/mo income. If I rented as a house 1800/mo and it wouldn't cash flow based on a 15 year mortgage and expenses to 2000/mo.  I 'd have to link the mortgage rate to the 12 month T-bill rate to keep it attractive over time.

Their win: is headache gone, better tax position, higher than CD rate income for 15 years

My questions:

What tax advantages are there for the 3 siblings who are inheriting the house by owner financing it? I need a simple proposal that gives them more monthly income than a CD and tax savings while protecting myself.

I'd love to hear from folks who have done this any advise is greatly appreciated.