The travelers who are willing to do rent-by-room also pay on the lower end of the spectrum so it may be hard to get your property to cash flow. 

•Are they typically given a percentage of the cash flow along with interest on their initial contribution?

Purchase price: $350,000 Cash invested: $100,000 Sale price: $875,000 Stamford water view single family home on Long Island Sound.

If you're just starting out, a turnkey cash flow rental is a solid move.

Hawk Tuah mate hahaAnd now is when you reply with declining services but happy to offer a cash offer on portfolio to turn there self-managing misery into cold hard CA$H.... $57k per unit, done, let's get this signed..... 

To get more cash flow, it's more work.

Is it better that the seller's mortgage gets paid (by someone else) and the property turned into a rental or should the seller simply 'walk away" and stop making payments and the property become vacant ?

Prime -2%, 25 year term.Both require a 10% down payment. 

As I have just released I don't have much in the way of a down payment ($2000), and I am on a fixed income ($800/mo).

Your strategy was (is) to make no payments on the mortgage and live there with no monthly mortgage, tax or rent expense until a lien holder foreclosed, which you believe you’re protected against because the borrower on the existing note is in active military service?