The demand has absolutely floored me.

Just an observation.....their "equity after ten years" for Traditional Loan is an absolute lie/misrepresentation, at today's rates anyway.$72k, 30 year term, 4.5%--balance at end of 10 years=$57,664So, "equity" is $14,366.AND ----your monthly payment on the Traditional Loan is $365/mo, Not the $750/mo in their lease plan.AND------A 10 year loan at 4.5% for $72k. has a monthly payment of $ 746.22/mo------so at $750/mo on Traditional Loan, your balance is $00.00 so your "equity" would be $72k.

You absolutely must do this.

If a house flip financed by debt completes in 6 months, your absolute return would be pro rated to half-a-year versus the nominal interest rate.

If you do it right, the fact that you are also renting to him will have absolutely no impact on the fact that he is your investment partner.

Then within the past 10 or 15 years, a few key areas have absolutely exploded with development, bringing in fancy shops and restaurants, nightlife, and housing.

It is absolutely true.  

@Mark Gibbs Sweat equity is absolutely prohibited in an IRA or 401k plan.  

Likely have moisture damage unless it's absolutely bullet proof.

I'm a Virginia resident currently investing in my first San Antonio flip through a colleague down there (he also lives in Austin but invests in San Antonio), so I absolutely hear you on the long distance concern.