How would you approach this one?

I could use some good ideas from some seasoned members out there. Here are the basics:

Old home renovation almost complete. Tenant/buyer bought on a land contract and now that the balloon is due, he can’t refi and cash the owner out because of an IRS problem.
What he owes: 115k plus 25k to finish renovating
What he needs: Someone to loan him the money or someone with credit to partner with to get it refi’d.
Appraisal as of a month ago: 250k

Ideas? I can swing the refi without much problem. What’s the best way to approach this one? Refi it and carry it 6 months, collecting rent until he can buy, with a profit built in? In that case, lease/option?



Here’s what I’m thinking:

conventional loan 140k w/ 15% down payment of 21k = loan balance 119k

lease option to tenant/buyer 12 month term, 10k down $1000/month
estimated monthly on loan balance $820/mo (15 yr @5.25%)

purchase price 160k

Comments? Suggestions?