I'm going to be as lenient as possible I just worry that she could fall 1-2-3 months behind and it's just a really delicate situation to try to collect when she's having major health issues.  

Borrow at 7%, lend at 12%, collect the spread, something like that.

@Nick KnoblachOf course, you should always confirm with your own CPA who is familiar with your situation, but here's a few generalities:- CA taxes residents on worldwide income, so the CA resident will likely be taxed on the entirety of income that he/she receives on his/her CA resident tax return, including his/her share of rental income- CA will likely want to collect tax on all income earned in CA due to CA-sitused real property, so any non-residents in CA should likely be prepared to file a non-resident income tax return in CA to report his/her share of income earned from the CA real property-I'm not familiar with MN rules, but most states generally allow for a credit for taxes paid to another state. 

He had a lot of doors but collected rent in cash with a pistol. 

But if I could do it again I would buy a duplex to quadplex and take advantage of the ability to buy it with little or no money down (VA or FHA if eligible) and have started collecting rent much sooner.Advice I wish I had gotten earlier would definitely be accounting and tax related. 

The annual interest paid on this private loan was $600 or more for the prior year.If you're a private lender, you must report the interest you collected on your private loans as taxable income whether or not you received a 1099-INT from your borrowers.

@Corey Meyer I do not recommend collecting rent payments through Venmo.

You'll want to be able to obtain balances, confirm payments were received, obtain payoff statements, etc.Ask your friend to share the username and password for the servicer's websiteI recommend using a loan servicer to collect your payments and disperse payments each month to the underlying mortgage servicer.

She will only be collecting from Social Security when she decides to stop working.

******************************Current Loan Bal - $315kMortgage Pmt - $1344/mthProp Taxes - $840/mthInsurance estimate - $300/mthTotal estimated PITI = $2,483/mthHOA - $124/mthTotal Monthly Expense (not incl, Vac & Coll, Mgt, or Capex) - $2,607************Estimated Monthly Rental Income = $4,000 to $4,300Estimated Net Income - $1,393 to $1,693  ($4,000 - $2,607, etc)Annualized Net Income = $16,711 to $20,311***********Estimated Current Sales Price = $830,000Est sales cost of 6.5% (5% commissions + 1-1.5% other costs) = $53,950Est Sale Net Proceeds - $776,050Est Net Cash (after loan payoff) = $461,050 ($776k - $315k)******************************Est % ReturnsAs a Rentalbetween 3.62% to 4.41% ($16,711 net inc/$461k net cash from sale, etc)Again, this does NOT include vacancy, collections, management, or capex, etc.