It's worth $130k and current notes are $125k.  1st loan is an ARM loan at $100k. 2nd loan is a balloon with 25k principal.  

For my case NOI = rent - principal/interest - taxes - insurance - repairs.   985-262-60-170-100 = ~400/mo.   

I've hooked up with a younger principal broker who owns a duplex and he's also looking to flip a few houses. 

With that said, what would the payments look like if the agreement was Principal + Interest payments/per month?

@Amjad FarooqYou cannot depreciate or deduct remodeling costs on your tax return on your principal residence.

I am NOT an accountant, but I did find this article by one EXTREMELY helpful.It both explains the over-arching principals, and goes line-by-line down the HUD-1, specifically identifying whether the expense is a current expense (typically interest, insurance, property taxes), added to loan costs (e.g., points) , adjustment to cost basis (e.g., title, recording.), or neither (typically deposits/advances).

I would probably start paying down some principal along with the interest until you are in a position to refinance.I'm guessing the tenant isn't interested in becoming a homeowner if they've been renting for so long.I doubt interest rates will get very high anytime soon to where it would make a very big difference in the mortgage payment; Maybe the tenant will make up the difference?

Between 4% and 8% will go to your lender for principal and interest depending on how you finance.  

The owner is elderly with front end mortgage principal balance of $140.5k and a ballon payment at the end term of the mortgage of $62.8k.  

As a matter of principal, I try to give my business to the smaller banks if possible.