@Chris Nowlin
Okay, I can tell you're thinking! That's pretty much what new investors do and they usually take the same approach in real estate as they do some personal property widget, like a car dealer or buying and selling boats. First mistake!
RE is treated differently than personal property, because RE is different and that effects how it is valued as well as how we comply with applicable laws. So, first, learn real estate as your girl friend did, but pay closer attention to the basics because she has probably forgotten the hows and whys. The real real estate knowledge needed is in any agent's text book for their licensing classes or you can check out a free basics course from my logo, everything is free now, LOL.
There's a truck load of applicable laws in RE and RE law is not the only aspect of the business you need to study or be aware of. Business law, contract law and tax laws also are on the playing field.
Let's begin with your lender, you may know a banker who can give you funding with 10% on a non-owner occupied property, if it's a bank FDIC won't like that at all as a straight mortgage. It's not just the lender's regulations, PMI won't take that deal and these mortgages must carry insurance when dealing with an institution. So, let's assume your lender is a private person or a very naive broker/hard money lender.
Next issue, a bank cannot give referrals of near miss applicants without them taking on liability for your performance and FDIC really would not like this! What you'll never hear an attorney say is "Oh, you had a car accident, I do bankruptcy stuff, go see Larry Lawman, he's the best accident attorney around!" Not only are such referrals highly unethical but the person giving the referral takes on liability in giving such advice or guidance. I suggest you not even ask a banker to do this as a referral from the bank! And, they won't do it if they have any sense.
Next, in your plan, you're seen as a dealer in real estate, you're setting up a financing transaction under the Dodd-Frank Act, highly illegal if you get rolling with rent-to-own stuff.
You can lose your house, have to return all monies paid to you, get a fine of up to $100,000.00 and/or 10 years in federal prison violating financing laws in installment real estate deals, which is what you have laid out. I don't like the odds myself.
The black eye comes about by in dealing with consumers, tenants, especially a tenant who doesn't qualify to buy or obtain financing.
Your plan is also considered as predatory dealing, charging a premium for the arrangement, no financing arrangement adds value to real estate as you have outlined. Texas has predatory dealing laws at the state and even in municipalities, TREC really doesn't like predatory dealing.
Again, this might be fine dealing with a car or train load of widgets, but with this approach in RE in Texas (or anywhere) you can be wearing an orange jump suit and be feed 3 times a day. If they let you off easy you'll most likely be broke from legal fees and out of business and lose any professional license in Texas as well as the ability to obtain one in the future.
Don't feel bad, this is the most common mistake made by all of the new investors on this or any other site, or in starting off in RE. Much of the attitudes we develop over our lives in business dealings with personal property are out of bounds in real estate and especially in finance.
Oh, I know, this RE guru teaches this or that, or I see hundreds of others doing this, there is also the kid that jumped off a bridge too! You're on a pretty high bridge here, you may not survive and injury is likely when your deal unravels with your unqualified consumer tenant. It will unravel just like 90% of such deals do, that's pretty much why they set this stuff in federal law a couple years ago, so, give the regulators some time, I bet they catch up.
Learn real estate before attempting to deal in real estate! Good luck :)