This business is just not about taking unreasonable risks.  

I will, in some sense, defer to @Mark Robertson on this, but that is not unreasonable for a deal.

Will that eliminate the financing hurdle?

My hurdle however is that very time commitment and the "gamble" people who may not understand the investment often claim.

With 10k you do have options, think outside the box and just get started which is usually the biggest hurdle. 

They were fine with that.Am I being unreasonable? 

From many folks in the real estate community, I hear crossing that hurdle greatly increases one's understanding of the real estate market.

No waterfall or IRR hurdle structure.

I tried to handle this over the phone, and the tenant stated he was "doing his best" and that my expectations were unreasonable.

Borrower shall occupy, establish, and use the Property as Borrower’s principal residence within 60 days after the execution of this Security Instrument and shall continue to occupy the Property as Borrower’s principal residence for at least one year after the date of occupancy, unless Lender otherwise agrees in writing, which consent shall not be unreasonably withheld, or unless extenuating circumstances exist which are beyond Borrower’s control.After that, you are free to house hack to the next property.