Does Lender need a lending license to provide a private loan for a residential property in Texas, considering both the lender  and the borrower are California residents?

If I was in your shoes, I would have them be actual partners and guarantee the loan with you.

In my current situation I don't have any capital available, and have a very large student loan burden. 

Loan rate/terms get complex once you hit that 5+ unit property, so you'll ideally want to work with someone who can help on both sides of your plan.I'd also consider MTR as an option for a $70K property.

Now use the same $100k to buy a $500k house with a loan, it goes up 10%, you have $50k!!!

Does anyone have experience with these type of loans?

A contract for deed doesn’t transfer legal title, it’s a contract that states title WILL BE transferred when the loan is paid off, or a specific amount of equity is accumulated in the property.  

The cash yield from the loan would be greater than the yield from renting the property, even with area appreciation. 

Plus, if rates drop later on, your position will only improve.

For a lot of fixer upper homes, my offer, using an renovation loan, often loses out to lower offer cash buyers.