Is leasr option the best way or is it flipping?

Hello all. I have a friend that is interested in purchasing a house. His wife has a judgement against her from when she was 18 over 7 years ago. Their credit together is not the best. If they can not get the loan, I am considering purchasing a property for them and then at a higher interest rate/price give it to them. For example, if the house was 150,000 at 5.5% 30 year fixed, I am considering selling it to them at maybe 150-160,000 at lets say 6.5% 30 years or something. However, I do not know what the best way to go about this situation. Should I hold the note for them? or should I do a lease option? I am not sure of the tax differences. If I held the note, I would have to pay capital gains tax right away correct? Is this true for a lease option as well, or do you pay gains tax when the mortgage has been repaid??? Any help would be great. Thank you. -John Mr. Vodka [ Edited by vodka on Date 05/30/2003 ]