Again i'm new to this so not sure how it works.As far as 'high interest' , I probably misspoke in saying high interest and meant more along the lines of not wanting to pay full interest if I were to pay down the loan early, as it is my understanding that in a conventional mortgage interest is calculated, added to the principal borrowed, and that is the amount you pay whether you accelerate payments or not. 

There is also a small one I know of that also does individual notes that I don't have much investor feedback on yet, but underwrites at a conservative 65% LTV and less, and supposedly has been in business since 2012 with <3 foreclosures and no principal loss.

As of 11/30/18 there was a principal balance of $1,003,509, so you would recognize this amount in full if you collected the note in full.

Ive been shopping around for helocs, one bank offered me cash out refi with “recast” option where they will lower your p&i payments if you put more payments towards the principal, you can do this 3 times a year for the life of the loan, no fees.

For sake of discussion, let's say the monthly payment is around $200 ($166 of principal on a straight-line payback and whatever the interest is [the loan is probably fully amortized, so the principal-interest amounts are going to vary each month]).In today's world, $200 a month is not a lot of money when you are making a professional income.

-Should I let them make extra payments directly to principal?

If you put a 3.5% down payment, and you buy a small multifamily with an FHA or 203k loan, you're maximizing your CASH ON CASH return, since, you are putting down a relatively small amount, in exchange for someone else paying off your property.Your tenants are ultimately paying down your principal, so if you can use the least amount of cash possible, there's no reason not to!

I could not in good conscience allow someone to live in an unfinished basement.To your wife's point, I agree with her in principal.

And I received principal of $325,000 at closing.

. ($550k * 94% = $517k) (Original loan balance of $353k) ($517k - 353k = $164k) ($164k - $127k = $37k) (Don't know how much principal you've paid down since buying, hence the assumption of about $40k).