After a set amount of time, you get the choice to complete the transaction (buy the house) at the agreed price or not buy the house and the owner keeps the extra amount of the rent payments. 

It is a 2 bed, 1 bath house, in which he is subletting to at least 3 or 4 other people.

Other KPIs and considerations you should evaluate when talking to any lender who offered private placement of loans/notes are historic default rate, how quickly they can place your funds (do you get preference over their income funds, for example), average interest rate - borrower note rate and what is passed through to you, are loans serviced by a 3rd party servicer or in house.

Is it a room in your house? 

If the house hack is renting rooms within your house; tax wise likely worse because you can only depreciate the fully rental areas (bedrooms and maybe bathrooms).

I see that you recommend NOT having my mom deed the house over to me in order to borrow against it.

For myself hands down the fastest way to get to Fi is via house hacking. 

I have used both TSP loan and HELOC to purchase investment...I certainly thought the ROI from real estate was better than relying on highly fluctuating stock market. 

Upfront Costs Readiness✅ Budget for repairs, upgrades, tenant screening, and marketing before listing.✅ Set aside funds for legal or professional fees if needed.4.

ONly money spent securing the house against waste.