If i understand the situation correctly, the "salesperson" you are talking to is telling you that they don't actually check leases, but they want the tenants to be tenants for atleast 6 months?

I would like to have a good relationship with my tenant but at the same time I don't want to think they can take advantage...has anyone come across a similar situation and what did you do?

there is such a wealth on knowledge in this thread and many many options for your situation, and they’re all right. 

But before I ask those questions I'd like to give a little background of myself and my situation.

I'd recommend taking a step back from the situation, look at it from a 10k foot view and wait until you can approach this with a clear mind and heart.

Wondering if you guys have ran into this situation before, and have any recommendations.

I figured this is a great opportunity to alert others in the Nashville REI community, as well as get some feedback as to what one might do in this kind of situation.

Basically wondering how others in similar situations (seeking conventional financing) have structured partnerships with a close friend.

Very specific situation I've got here that I haven't been able to find good information online that fits this unique criteria.I have a friend that has a property that they own free and clear of mortgage, yet they are paying a HELOC of approx. $300 a month for.

@Jake Keating I’d suggest consulting with a local tax and/or estate planning professional for advice on this issue to make sure you get the best advice for your specific situation.