I don't think it will create any equity that you could pull out, but if you are planning on keeping the building, it seems like a good idea.

Also, it creates value as properties are improved and a service is offered.

I was going to drop the management company and create a lease myself, however, the tenants RE agent said that she could create one for me (her offering to help me out).

If you have a $100,000 loan at 3.75% and that goes up to 5.25% but your able to get another 50-100k out the additional cost on your current loan is only $1500 per year which is a small price to pay to go create some other opportunity that over the life of that second investment can yield you $50,000-$150,000.My biz partner told me years back, "Don't step over quarters to pick up pennies", which to me most of the time translates to calculate the money you are not making by taking that next step vs the money you are trying to save.

On the downside though, this creates a much trickier lending situation, given the increased vacancies, especially since the property doesn't have that many units to begin with.Given that we haven't yet closed on the property, what's the best way to proceed?

If China buys more notes, it floods the market with dollars, creating inflation and…you guessed it, Fed increases rates.If you are a long-term real estate investor, rate increases are GOOD If rate increases, mortgage rates go up as well, making it harder for buyers to pay for homesIf rate increases, homeowners that have a low mortgage rate will be reluctant to move from their current homeFewer sellers and more buyers not affording a home lead to an increase in rental demand, driving rent amounts up and decreasing the time to find tenants for your rental properties.When fools money rushes out, smart money comes in!

I know when I do deals I custom create terms for my folks and not all terms are exactly the same. .. remember this is total beginner borrowers who don't know what they don't know that is who would respond to a no money down 100% loan.. with the highest rates in the industry right now.. ( which I totally get and would expect for the risk they ultimately take when and if they close a loan for a beginner with Zero money down.. 

FWIW, the approach being shown to me in this deal isn't that of a hard money loan, but creating a new LLC to close on the property (wants to close in  a week actually)  that will have several individuals owning a share in this LLC proportionate to their capital stake.   

Steve speaks to the mission/goal of what he is providing folks in his community AND about how he is trying to create a legacy for his children by immersing them in the business, having them put in sweat equity, etc.-- which is EXACTLY my why....   

For me, the key is creating great deals.