One way will be wages, subject to self employment tax.  

Both homes are in areas with stable employment for high income earners.

Employ a process for removing the outgoing tenant from the lease and charge a reasonable fee for this administrative work.

However, from tax perspective, it seems to me flipping houses under an llc or s corp pays more tax due to self-employment tax.

If you research his "employer" I bet he is the owner.  

I could write out some document employing them for free rent but not sure how that might work atm.Thoughts: Putting them on the loan may be silly because I have better credit I believe.

I have been in construction all my life and would like to make the job change from self-employed construction company to owning & renting property.Joe

I currently employ one (the only one I've ever hired), and not sure what I think of them.

That much is obvious, I know.There are hundreds of plans to choose from, unlike an employer who will only provided a few choices.Depending on circumstances, the plan you get may cost anywhere from a few hundred, to a thousand per month.

Maybe the current employment is a poisonous existence, maybe the newbie has an extreme entrepreneurial spirit, maybe the newbie has an excessively detailed plan and the capital to back him/her up for six months/a year.I agree with all of these.