Then out of the portion they keep, they pay income tax, E&O insurance, health insurance, MLS dues, NAR dues, continuing ed, marketing, car insurance and maintenance, retirement fund, etc. then live off of what's left.

The only reason I'm thinking about doing this is because I would get a ton of loan pay down very quickly because of his low interest rate and 0% secondary note to pay his Equity off. 

And if the tenant is enough of a pain it will ruin the more lucrative main tenant because they will leave. 

If you ever read an EOB (explanation of benefit) you will see how low the insurance reimbursement fees are. 

Rate, amortization, low down.

The Niceville market is HOT for retail houses and inventory to rehab is low.

it is extremely hard to find good deals in my market. side question: given that this is a big 3-unit apartment building in a HCL area, how much should i set aside for repairs, maintenance, and capex every month/year?

Its a more saturated market now due to low barrier to entry and all of the "guru's" selling Arbitrage online to folks.

Just fired an investor wanting to self maintenance a rough property as our bids are “too expensive”.

Quote from @Bonnie Low: The combination of the two is not a ridiculous idea.