Rich,I found this on the IRS site http://www.irs.gov/Individuals/What-is-Earned-Income%3F;In this link the IRS clearly says that interest is not considered "Earned Income"Now understand I am neither a tax attorney or accountant however, If I was in your situation my expectation would be that I could collect this income from holding the mortgage without reducing my SS benefits.Probably your best bet though would be to contact a tax accountant or tax attorney (or both) to be certain.

And you can also put ads in craigslist for the salesprice.I bet someone here can get you a good sales contract that's written from the seller's point of view.

They told me it was a catch 22 scenario where they could not physically insure the place for the ARV as this was more than twice the purchase price, however they also couldn't insure it for $80,000 as this was too far below the ARV value?

What I would bet dollars to doughnuts on is that with respect to charging fees and usury issues and lending requirements, I'd say half the private deals made by those who "really do" lending on the side so to speak would not be compliant.

Definitely look into the 1-4 unit financing as I think that will be your best bet as a new investor.This video may be helpful when evaluating deals as well

Your best bet is with local banks and the big banks.

If you do want to get financing do it before you quit because it is almost impossible w/o a W-2.Why not consider instead of one or the other of quitting or staying, maybe a 3rd option where you quit that job but find ways to bring in other income.Keeping job usually best bet until you are solid financially.

If they raised wages from 7.50 to 12(not 15 they are asking for) I'd bet a burger price could go up a nickel and more than cover the wage increase, but the burger lords will probably take the price up a quarter and profit even more (watch and see).

But I will bet in 10 years wewill all be glad we skipped those things

You're betting values will go up and you can sell later for a big enough profit to cover the negative cash flow while you're holding the property.