Next, when  they sell their properties they sell at a break even and sometimes at a loss because its difficult to achieve refinance appraisal results when transacting in arms length transactions in these lower barrier stagnant market. 

With current rates, I am only thinking of a 5yr or 7yr arm.

Your budget can not dictate the safety of the project and your relationship with the town and permitting.

The interest rate they gave me at us 7.70%, 5/1 ARM, rent to debt service ratio is 1.21My credit score is 672.

Quote from @Joe Yobaccio: @Chris Seveney I am trying a simpler version of a loan partial, but want to keep my name on the note and Colllaterlize it for safety of a lender and would like some feedback on the terms. 

Terms are 9.5% fixed 10 year, Interst only with 20 year ARM.  

Safety alarms are always on the tenants to take over the account or make one.4.

The mortgage from the cash out is the Lien and can be set up in an LLC or vested in your name.DSCR is great and offers 30 year fixed, 5/6 ARM even a 40 Year I/O Interest Only fixed for the first ten (10) years.Much better than having a smaller Heloc $20K+ which will have a higher rate and a shorter amortization.

. - Make sure you get a security deposit and perhaps do a surprise inspection of their current home.S8 requires an inspection (mostly health & safety) before approving a lease and then annually thereafter. - Not something most landlords taking care of their properties have to worry about.There are limits to clauses they allow in your lease.

Lesson: in a pro-tenant law city especially, don't do illegal things, don't have fire code or safety violations and if you ask someone to leave, follow all local laws.