Brian:
If you are going to have the seller deed the proeprty to you and take back a purchase money mortgage then you would legal vested title to the property and would enjoy all of the benefits that go along with that status. As the property owner YOU would be responsible to pay your property taxes and to maintain insurance.
As for first rght of refusal language. This is something that should be inserted in both the mortgage and the note. In essence it give you the first right to purchase the mortgage and note in the event the seller were to attempt to sell it at a discount.
If you are putting down a substantial down payment and are establishing a strong equity position in the property perhaps you can after a short while place a 2nd lien mortgage against the property to pull some of your cash back out. However I would not consider this as being easy to do.
I am about to make an offer on a nice 3bd room home where the owner will hold. I just had a few concerns such as what is right of first refusal. Also who receives the tax benefits such as local state taxes paid on the property. And what about the money I put down and the equity I have can I still get the money out of the property to reinvest?
When you submit a contract to the seller that is not exactly to his liking he may make the acceptance subject to better offers for a time period. You have the first right to meet the other offer. If you do the contract is adjusted to the new terms and you begin the closing process. If you are unwilling to match those terms you get your earnest money back. If you occupy and have the obligation to pay the taxes, then you can deduct. There are various arrangement such a contract and options where the owner remains on title at the courthouse and may get those deductions. Borrowing back out the equity may not be the easiest thing nor the most advisable. Much more information would be needed to make a reccommendation on that.