Why would you spend your money in a BAD neighborhood and in a city where the law is in favor of the tenant?

Unless real estate law is dramatically different in TX than it is in MA (and it could be), he is under a legal obligation to disclose these defects to other buyers.That said, I'd walk away. 

Research the max rates you can charge (usury), and laws about private lending in your State. 

Interest rates and terms are pretty open as long as local or state laws are not violated.

If it's a bank or other institutional lender (a company whose business is lending), you should expect they are plugged into the credit bureaus and will report your payment history there.If your lender is a private person, like a friend or family member, or maybe a local person who makes a few loans a year, I would assume they are not plugged into the credit bureaus and the loan won't show up on your credit report.Keep in mind that if you apply for other loans, and they ask you for a schedule of real estate owned and mortgages you're responsible for, and you omit a property and/or private mortgage from that listing, you'll likely have committed fraud by saying that you're submitting complete information about your financial situation but intentionally omitting something.In other words, a loan/property may not show up on your credit report, which means a lender you're applying to for a mortgage may not know about it, but that doesn't mean you're not required in the application process to list it anyway, and it does mean that if you intentionally omit it, you're probably committing fraud or breaking some other law(s).I would assume that the loan could show up on your credit report, and that you will be listing it in future loan applications to institutional lenders, and behave accordingly.

Definitely read your landlord tenant laws for New York to make sure you are in compliance with them regarding rent increases.

Also I've been made aware of the new tax law that provides a 20% tax ded for equip/contents of which I'd like to take advantage.

Check your Landlord/Tenant Laws before you even buy a home!

This opinion is strictly based on general assumptions. 

My in-laws own a house in San Francisco and my childhood best friend bought in Mill Valley a few years ago so I'm at least familiar with the market there.