I think your advice does not reflect that this is a business and he is loosing money.

I need to make sure I have a good contract, understand all of the laws in TX regarding seller financing and have a contract written to reflect my best interest.

Worked out amazing if you bought there in 2011-2013, but not so much now that it's on the other side of that boom and the prices reflect as such.

And if you miss a payment it will reflect on their credit too. 

Just because you search Airbnb once and see someone trying to rent theirs for a certain price, that's not reflective of the market.

Any information provided is the personal view of myself, and should not reflect the views of any firm I may be affiliated with.

At 80% LTV the return from appreciation is 20% which is 16% more than CPI.If the RE appreciation exceeds the CPI, which I believe most markets will over the long term, then the returns are even greater.In the near term, prices may not keep up with CPI (and may even decline as I am reflecting in my near term underwriting) but in many markets there is a housing shortage and I am confident that in most of those markets the long term appreciation will exceed CPI.Leverage will increase return for long term holds in most RE markets. 

If the optionee takes the option and the option price is credited to the sale price you'll need to adjust difference to reflect the option price as part of the sale.

What kind of split would be more reflective of a scenario like this?

First off, Houston does not have the same housing problem that Washington D.C. has and therefore the housing assistance voucher amounts are reflective of that.