Asking to anyone who has experience, knowledge or connections in these southern texas markets, how has this or does it affect your real estate strategy and returns? 

After that, they have returned 2 more times and I assume they are going to do their best to be allowed to get in the property.

I believe your loan could get called if you transfer ownership to an LLC without consent of the lender, especially a brand new LLC that does not have two years of tax returns.

If he doesn't need the cash now, you could also negotiate a split you're comfortable with to get him the return you and he feel he should have at the point you refi when the balloon payment comes due. 

As for income verification, I require the applicants two most recent paystubs and if self employed I need their most recent tax return.

Prioritize stable cash flow, good location, and manageable property condition, while considering strategies like gradual rent increases, expense reduction, and value-add improvements to enhance returns.

I did all my other due diligence like asking for paystubs, W2s, Tax returns, Employment verification, bank statements etc etc and did not see any red flags overall.

Even if a title company were to manage the setup making sure all parties are paid, the cheap debt and cash flow would not be enough to be enticing to any investor even if midterm rental could yield a healthy return. 

A lot of your returns come at the time of sale. 

If they pass the screening, also find out who is paying the deposit as that is the person you will be returning it to once they leave.