I would not think it would be worth it in the scenario I described.  

Written about migration to California, the last line describes it well, "You call someplace paradise, kiss it goodbye".

The interest insured shown on Schedule A of the policy generally is described as either "Contract Interest" or "Equitable Interest". 

Based on the context I described in the OP, I do not want to enter into a lease agreement with this kind of person; I can already tell he will not fit with my management style.

Couldn’t I get a much better interest rate than the 5+% that you described?

@Julie Williams actually 6% COC for a single family house isn't all that bad if the neighborhood/location is as you have described. 

I have properties in a market about 40 minutes northwest of Milwaukee and the $65k/unit is not a problem for the loan program you are describing.

The hesitation in your post and the way that you describe the neighbors tell me that this is an uncommon environment in your area. 

Also even if you did what she describes in the ideal scenario I believe there would still be some depreciation recapture for the 2-3 years after you move out of one of the units and start collecting rent again.

But living in a place as big as Los Angeles I'm holding out hope for one of these people to be local for me (fingers crossed).One question for you Bill, I see you describe yourself as a "Fee-Only Financial Planner", what does that mean?