@Matt GilroyThe deposit should come off the top at the closing Unless you arrange otherwise .

Hi,I'm looking for advice on structuring a financial arrangement with another person.

This is a different structure, I realize, it is a debt investment and not an equity investment, but for some potential partners, that might be a preferable arrangement. 

Does anyone have experience with such an arrangement and where would I go to set up this operating agreement?

@Isaiah Williams1200 sq feet isn’t much room for such an arrangement with a stranger .

We worked our arrangement out to where he gets the equivalent of a 20-year loan payment every month after base cash flow.

If it is a large complex (above 50-75), you will most likely need to partner with a more experienced player who can bring some capital and experience to the table.You may be able to get some cash and a small percentage of the sponsorship in exchange for being the eyes and ears on the ground.

The lender is at a 60% LTV after I rehab it. he gets a monthly check and is quite happy with the arrangement.

The interest you save is great and the mortgage balance will accelerate downward faster.So now when that is arranged and recorded - there are a number of things you can do next - refinance - put the seller first in second place - you get cash -- when you are ready to sell you can take some cash, do a wrap on your interest free mortgage and your existing mortgage and charge interest on the money you owe (it don't get no better than that - the yield is off the chart).

How have your living arrangements been throughout your life?