This deal looks to me like you will be losing something like $500 a month.IDK how you're going to get a loan with 5% down if you're not living there.Doing this deal is a gift to your friend. 

It’s a great way to build credit and the best gift I ever gave my kids was good credit and how to MANAGE it (he’s never charged more on that card than he can pay with a single paycheck.  

Don't be afraid to leave them some $3 Trader Joes/Aldi wine as a welcome gift too - that'll guarantee your positive review :-) Best of luck!

I've seen many different forms of promotions to get a renter to sign early; gift cards, percentage off of rent, or something like a small deposit for a pet, etc. 

If not, you're working with the wrong lender.Also FYI for Conventional financing you can put as little as 15% down on a 1-unit investment property, but with investment properties you cannot use gift funds.

I found "presents" left behind by cats in our newest property we picked up last week, but never human gifts!

I also don’t want him to incur a lot of gift tax by gifting it to me (I guess I could pay him back whatever tax he pays on it?)

Hi Roxanne,Down payment gifts cannot be used on an investment property purchase, assuming a normal 30YF residential mortgage is being used.Two options:- Family member can certainly buy it with you, as coborrower.

This is much better than discussing how to charge a late fee or what holiday gift to get residents.

I would get a gift card every now and then as a thank you, but never asked for anything.