TLBs typically mature within six to seven years and have a small repayment schedule (usually about 1.0% of the principal amount of the loan per year, payable quarterly) during the term of the loan, with the remainder due on the maturity date.

The private investor is made whole with payment of their principal returned along with their agreed upon remaining interest and if the private investor wishes to continue we put them into another property.We have a PM on all of them already.  

I could pay him a decent sized downpayment, or probably even purchase this with a conventional loan - but then I lose the principal paydown with the original mortgage, plus I want to have less cash tied up. 

However, some times smaller homes may NOT have a higher price per Sq Ft in which case make sure that you are comping similar homes.For approximate HML costs, you can multiply the principal amount you intend to borrow ("P") x interest rate ("I") x time  ("T") listed in amount of months divided by 12 [e.g. 6 months/12 months] + Points (as a percentage] x Principal borrowed.Equation: (P x I x T) + (P x points)Example: $100K loan; 12% interest & 2 points, and 6 month timeline[$100K loan x 12% interest x .5 year(s)] + [2 points x $100K loan] = $6K + $2K = $8KGood luck!

If you have any feel for what the owner would do with the funds, such as put them into a 'safe investment' such as CDs or bonds you could try to use the benefit of a potentially higher interest rate with almost no chance of losing 'principal' (the equity in the house in this case). 

You can not obtain a lender's license and then a servicing endorsement unless you or someone within the company qualifies as the principal loan broker.  

So if your Principal and Interest payments also come close to or exceed 50% of your rent return - you're heading into negative cash flow territory!

The equity through principal pay down & appreciation allowed me to start a fund investing in apartments & more in my region.

Originally posted by @Jared Senne:so the town I want to buy in is hour and half away I would still stay there on the weekends though and I would be paying all the bills there and treating it like my own You wouldn't be living their a predominant portion of the year or as your principal dwelling so obviously this is not a primary residence.

You have now made it you principal residence for at least two of the last five years.