Since he will only be providing capital, I proposed that we structure this like a loan- he puts up the money, then upon sale of the house, I return his money with interest (I was thinking 15%ish).

Currently Investor cash out rates are at 5.99 for a 10-20 at the bank or 30 years fixed  at 7 to 8 if you use a HML.I suggest you always run your proposed deal by a broker or lender with experience in this are to insure the deal makes sense and you can exit with all or, most of your money.

I do this because it cuts the risk that both tenants reject your proposed increase and put you on your back foot.  450 -> to 600 is still well below your market rent, and maybe you choose more, but be careful. 

I certainly agree, but there are  few cities that see it differently, have passed legislation,  and have effectively removed due process.

Now more than ever it's important that landlords stick together and work together especially on the legislative side, not only for networking and education.

You may want to ask if they can propose a way to avoid it.

I haven't had this issue, but I'm so fed up with Seattle's anti-landlord legislation, I've pretty much closed up shop here, except for leaving a couple for STR.

Have you seen any groups lobbying for legislative change?

However, the arrangement triggers some special risks for buyers and sellers, and it's wise to engage professional help to mitigate those and allow the process to run smoothly.Here's what buyers should consider before they finalize a seller-financed deal.Don't expect better terms than with a mortgage.You may need to sell yourself to the seller.Be prepared to propose seller financing.Confirm the seller is free to finance the sale.You needn't necessarily finance the sale for a long time.Good Luck!

I knew there had been significant legislation in some states regarding CFD, but I think in the vast majority of states a CFD still does not require foreclosure.