TLDR: If you're in year 4 of 10 and pay the mortgage off, your payoff balance will be adjusted to reflect the cost of buying a gov't bond that will produce the equivalent amount of dividend payments for the remaining 6 years (in other words, one way or another, the lender is absolutely going to get their 10 years of payments).

Yes, I have answers to all of this but they are for too lengthy for a forum post.

This could be just like stocks and bonds at the end of the year.  

Also, consider that he may be rolling the cost of licensing, continuing education, and other associated costs into the permitting fee.In some situations, municipalities require specialty bonds or licensing fees.

Looking at buying my first piece of property and finally found a condo I like in a great location, under budget but the HOA is stringent on rentals (all leases must be approved by HOA, approval process seems lengthy and min credit score is 700 FICO) should this be a deterrent for me in terms of buying this as rental property?

You mentioned arm's length. I

Nothing is passive and even US treasury bonds which are considered the safest investment require one to monitor the economic climate.

Foreclosure is a lengthy and expensive process. 

Quote from @Tracey Bond: Looking for helpful information.

How about a stock, bond or other publicly traded security?