Your contract makes it appear as if the tenant pre-paid a year's worth of rent increase at $750 so they could demand you return the unused portion.It would be far easier to just write up an agreement that says the tenant is paying $9,000 towards the cost of a new garage and that the garage will be your property and remain  your property, even after the tenant departs.

Some companies offer prepaid leases, where you pay all 20yrs payments up front (for a generous discount). 

Account Closed I am closing in two weeks on a property that costs $197K and my closing costs are $2169.75 plus prepaid costs of $2200.

Typically rent is not earned until the month it is due, so should be retained in a prepaid account, and/or accounted for as unearned revenue until the month it is earned.

The settlement charges consist of 2 main categories: closing costs and prepaid/escrow items. 

I'm not familiar with California law (Assuming that is where you're located), but you may also want to include them on the lease, I had a similar situation with a tenant in Ohio where the parents prepaid rent, my attorney recommended including the parents on the lease vs just as cosigners.

I haven't done a refinance yet but I can talk about the closing costs of my first deal (which I bought with a conventional 30 year loan):Underwriting fees: 600Appraisal: 675Title Fees: 1650Recording Fees: 150One year of insurance prepaid: 600Initial Escrow payment: 400So overall, I paid about 4k for closing costs as well, but I bet this also depends from area to area.

Prepaids $519Homeowner's Insurance Premium (12 months) Mortgage Insurance Premium ( months). $420Prepaid Interest ($19.86 per day for 5 days @5.125 %) Property Taxes ( months) $99F. 

The bank was going to require 100% of PITI to be counted in the ratio, even if prepaid as part of the loan for the year in which we intended to complete the flips.

“The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value).”https://www.fanniemae.com/content/guide/selling/b2/1.2/03.htmlI would like to get as much out as possible and move to the need deal.