I'd start with the deferred fee scenario and after a relationship and trust is built THEN go ahead and consider an equity partnership.

If you don't have too much for a down payment consider an FHA 3.5% option on a duplex.

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is likely to be higher, then you may consider an umbrella insurance policy.

Maybe consider an OOS flip considering your funds. 

Rather than go to war with costly litigation, consider an alternative that goes like this:The parties agree to accept appraised value as the valuation method The parties agree to who selects the appraiser and agree to split final appraisal costs The first appraisal comes in at a value that is acceptable to the first party but doesn’t meet the approval of the second party The second party chooses its appraiser and the parties still don’t agree on value The parties agree at the outset that if neither parties appraised values are acceptable to them, the first two appraisers select a third appraiser and agree at the outset that the valuation of the third appraiser is final Basically this approach to setting value has been called “my appraiser, your appraiser,Their appraiser Best of luck sorting this out

It is not so much about interest rates and mortgage terms, it is about your investment objectives and risk profile.When you consider an investment are you looking at the return on the value of the property or the return on funds employed?

Perhaps now may be an ideal time to consider an amendment to the agreement, before proceeding further.Thank you!

@Brent Huling Would you consider an interest-only hard money loan?

Yes, you'll for sure want to make sure you get a credit and criminal check on your tenant, but you may also want to consider an eviction and Income Insights report. 

I wouldn't consider the couple.I do have a question - would you consider an applicant who has filed bankruptcy but the case was dismissed?