Please understand, these are rules of thumbs and there are variables that may make some of this work better or worse, but this is a variation of the framework that I start pre-screening all of my deals and my clients deals with.I understand that you are looking at someone paying part of your overhead while the asset appreciates, but let's look at the numbers more deeply as they are today.The mortgage payment is figured on $172k (principal after 3.5% FHA down payment) for 360 months at 5% interestMortgage - $925/moTaxes - $125/moInsurance - $100/moPMI - $108/mo__________Monthly expenses = $1,258Cash Flow = -$558/mo (negative)This number does not include other, normal costs like maintenance, vacancy costs and loss of rents, capital upgrades and expenses, property management (future expense,) other admin costs (accountants, attorneys, legal costs, etc.,) or the hours of personal time you may have to invest in finding and screening tenants, scheduling maintenance and repairs, chasing late rents, etc. 

. $185/mo + $150/mo in principal pay down average over first 10 years = $335/mo on $0 investment.$4020/year at infinite COC Scenario 2: Keep all your 82k cash in the property.

The Note would contain all the payment/default provisions.Personal guarantees from the partners/principals who are not lending the money to the entity would likely be required unless this issue was negotiated.If real estate or other assets would be used to secure the loan -- not clear here -- a security agreement would be executed (following the formalities outlined above), then recorded among the land records... with real estate that means either a mortgage or deed of trust.Best course of action would be to hire an attorney to prepare the paperwork.

Had you done that a few months after your first post (about two years ago) you could have had 1.5 years worth of assisted principal down payments from roommates and even some appreciation by now. 

You pay back the principal in a balloon payment at the end of the loan's term. 

Principal+Interest Other Monthly Expenses = $515.32 $182 - 7% vacancy$108.33 - 5% Maintenance$108.33 - 5% Cap Ex$116.66 - Water/Sewer (only utility I pay)Total Monthly Expenses $1703.06 Cash Flow = $2600-$1703.06=$896.94This is for self management (w/ PM it would be closer to $650 CF).   

I love the 1st day of every month because I am paid twice / once in cash flow and next in principal reduction as we have anywhere from 6-13 years remaining on our loans. 2 questions for your situation:1.)

Although it varies by price range and rent amounts, typically expenses for a landlord are 50% or rent - not including principal and interest payments. 

Rent and paid down the principal so you have 20% equity and refi. 

The cost is $269, and you have (2) mandatory courses to take (Real Estate Principals + Real Estate Practice), plus (1) course you can choose (Appraisal, Finance, or Legal Aspects).