We have people who do note investing and are like "I do not want to buy a note that has less than 5 years left on it because they are paying more in principal"...

You will then have a few options with that rent money....you can put it into principal or you can start saving it to purchase yet another property.

I check the SEC, FINRA, ratings websites for inside information on the principals in the company.

With real estate you get cash flow, appreciation, principal paydown, and depreciation.

Mostly because it's set up to exclude things like mortgage principal payments and generally how it deals with capital expenses and deprecation. 

I suggest an aggressive principal pay down so they can have skin in the game.

I own a cabin in downtown Gatlinburg that is valued at around 30 percent more than my principal residence in Texas, yet the taxes on my Texas residence are more than 400% higher:  The Gatlinburg home taxes are less than $2,000 a year. 

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If they will take interest only for the life of the loan, that would be preferable to amortizing as you can likely do better than 5% interest with the principal money you wouldn't be paying.

His current monthly Payment Breakdown:- Principal: $314.66- Interest (3.875% rate): $578.779- Escrow: $700.79-TOTAL monthly payment: $1,594.24Estimated rental income: $1.2k - $1.6k per month.Would love to somehow capitalize on the existing fixed rate, but at his current monthly payment and the estimated rent it doesn't seem like a great opportunity for cash flow.