Quote from @Bonnie Low: I agree with Carolyn that MTR is a pretty safe pivot if the numbers work for you since the STR scene is still a little unclear.

Our friend would be funding the purchase and the rehab costs.

Let's say they currently make $50k/year, but need some funding to grow.

I have a rental that has a great rate and low mortgage so I make a nice amount of income from it .

On one hand I don't file it as a rental property, on the other hand I file as a rental with the low rental income. 

For the last 10 years, interest rates were artificially low-it was not normal. 

Interest rates aren't at their lowest right now; they're still higher than the recent record low rates, at roughly 6.75%.

If at all possible, I'd suggest beginning with a house hack because it should cut down your own monthly expenses while you build equity and there are great low down payment programs available for owner-occupied financing.

because with 30YFRM 7% rate, the aggregated principal payment is so low that it's almost meaningless anyway, so IO product can make verything great again.............. as long as you plan to sell it quick.But this product is terrible in two conditions :1) when rate is lowAnd/or2) if you plan to sell on year 15.

If you could find that in your area then using the 3.5-5% you saved for the down payment as a reserve fund would be more than enough.