If you want to protect your friend's capital as if it were your own, you'd want to:1) Secure the loan with real estate in the form of a deed of trust or mortgage (depending on the state the property is in)2) Obtain property insurance binder with your lender as an additional insured3) Obtain a lender's title insurance policy protecting them (different than an owner's policy) and transfer all funds through an escrow closer or real estate attorney (depending on the state, the requirements for closing may differ)4) Use a real estate attorney who also practices private lender law in the state the property is located in.

I found this house thru my connections and relationships in the neighborhood and purchased it directly from the owner.

I found this house thru my connections and relationships in the neighborhood and purchased it directly from the owner.

With the lower down payments, you also have mortgage insurance which is added to your payments, but it adds up (often to more than the 15% down payment you saved by putting 5% down for owner occupied homes).

I have hinted around to the owner that I wanted to buy it for over a year and he has had no interest to sale.

Are you looking to owner occupy the home or have it be a rental property?

Most work this way Rates: 9% to 13% (Most Deals are 11-12%)Terms: up to 36 Months (Most Deals are 6-12 months)Fees: 2-4 points(%) of loan amount paid at closing (Most Deals are 3 points(%))Minimum Loan Amount: $50,000 (For loans less than $250,000 $2,500 minimum fee)Max Loan: 65%-70% of After Repair Value(ARV) 100% Rehab Financing Available (Require 20% of purchase price down payment or cross-collateral)Closing Timeframe: 48 Hours - 3 Weeks (Most Deals are 2 Weeks)NO PRIMARY RESIDENCES, NON-OWNER OCCUPIED ONLY, BUSINESS AND COMMERCIAL USE ONLY.

Check your mortgage docs and with your servicer.You'll also need to look into:- Impact on your property taxes: some areas have different millage rates for owner-occupied vs non-owner occupied properties.- Impact on your home insurance: you'll need a landlord policy and confirmation of what will happen if vacant for more than 30 days.You should also consider impact of selling.

However, if you're using a discount company that's allowing you as the owner to set the rent price, approve or deny apps, etc. then your issue could be one of many things. 

Common for tenants to ask for rate reduction, rare owners give it.I suggest you do everything you can to keep the tenants if you can.