if they ever default on their payments, and it goes to a judge, they will say that they are an owner not a tenant. 

They contributed $125,000 cash as the down payment (25% of purchase price) but my wife and I are the only individuals on the mortgage loan.  

Figure out $900k loan and interest payments per month. 

If you buy in with a high rate, wait two years, and your property appreciates and rates come down, you get a double windfall when you refi because the payment goes way down and you have equity to pull.BUT, that is a big if in today's market.

ACH and debit/credit card payments are usually a couple days.

Why trade a 3% mortgage payment for an 8% mortgage payment, on a similar priced house?

Everything. 2) Make sure you have a signed contract that is legal and thorough. 3) keep the progress payments relatively equal to the work being done....example - don't pay for tile when you're still doing framing.Go get some bids and then come back and talk to us again... 

The borrower is coming in with only 10% of the down payment if approved.

We did this all ourselves with our own funds for down payments. 

If you have equity the best way to start the process is to do a cash out refinance and pull out some cash to use as a down payment on the new REI.