And for a small building like this, assuming say a 5% vacancy rate isn't going to do you much good.

So to the question...Let's say a house pops up on the auction site - it's a good one.

Let's say a person has a Airbnb rental arbitrage business.

I assume you aren't allowing the homeowner to have equal say as you, right?

Legally is it any different if I send, say, a family member in my place.?

You MUST say "a monkey wrote it"!!

It can be whatever you two agree to.Could be amortized, maybe that's the expected.Could be simple interest, say, a single interest payment each year based on the balance on Dec 31.Could be a hybrid like no interest the first X years, then amortized after that (and pay down as much as you can those first X years)Just remember to find out what they want and give them that.

They will usually say a family of four in a 2 bed space averages XX gallons a month usage.

I agree with what you have stated, although when you say lender are you referring to say a Wells Fargo, or Arbor?

Which they will STRONGLY object to, since the in-house lender comes with an in-house rigged appraisal that will hit value no matter what (they will say a million other reasons for the preference, but that's the real reason).