<human>: Condense the text into a few key points

My college buddies are moved into their new apartment and their light was not working so they called up the landlord and he swung by yesterday to help them out. Only one person was present while he was making repairs. (My friend's name is Phil, the landlord's name is Steve.)

While Phil was in his room, Steve went to the bathroom and told him to come in for a second. When Phil walked in, Steve turned around, dick in hand and asked "Do you think this is big?" According to Phil he said "I'm not gay," got weirded out, and walked away.

The landlord persisted to ask questions like "Oh you've never looked at other guys down there before?/Why don't you just look at it?" Phil kept insisting that Steve leave him alone but he continued to ask away. "Not even when you were younger? I used to be curious with my cousins and stuff." Eventually he finished with the questions and the repair, and before he left, insisted more that Phil take a look.

When he finally left, he started calling Phil a few times saying they could work something out and to keep it between them two and whatnot. When Phil told his housemates and I all about what happened we obviously grew concerned, but are trying to figure out how to go about with this situation. Obviously we've thought about contacting the police, but they figure there might be a way to make this whole situation work in their favor. Some of my friends were even talking about blackmailing to see if they could get the rent to be cheaper, but I was hoping I could get a good variety of answers from you guys.
<bot>: My friend called over his landlord to repair a light, while the landlord continuously tried to get him to perform sexual favors. We'd like to know what the best situation is for us to proceed