then his loan was denied because he didn't disclose child support payments on the initial application.

You should probably learn to stop saying, "double closing" - it's illegal almost everywhere thanx to abuses by short-sale flippers."

Give him a mortgage at 1-2% over the underlying mortgage so you make a bit each month.What happens to optimistic but financially weak folks is that they get into a deal like this, have a job loss, they get into substance abuse or some issue and they can't finish the house, or continue payments.  

The HOA denied any involvement in this, and I decided to pay out of pocket in order to avoid delays.

White appliances are solid, low rent and handle abuse better.

While I would never denie a person in need of such an animal I would expect it to be a good tenant don't laugh I'm serious here. 

So if your finance source for the 1st mortgage is a traditional lender they may deny a setup like you're proposing.It may be possible to avoid that by using a commercial mortgage instead of a regular residential one, but your terms will be worse - higher/adjustable rate, shorter amortization and probably a balloon payment.And because it's a residential property they may still want to see that the down payment isn't also borrowed.

But I have two felony convictions and they denied me because of that.

The IRS denied their status as real estate professionals and disallowed the passive losses.

I will have to see how much abuse it takes this summer but it's SO much better to lay on then the normal 'bar in the back' flimsy mattress they normally come with!