This way, you do not have to marry (which is equity/LLC) before you date (set return).In the future, after this deal, if you guys work together seamlessly, then maybe create a new LLC. 

Are you being paid as the contractor or are you putting sweat equity in along with your cash investment? 

So they would probably be in a very good positive Equity position? 

I can't believe that there will be equity in it as far as what I've paid on the principle, so is the idea that I'd make improvements to the place throughout that year with the rent (even though I think I should do it before I rent it out, right?)

I should be good because I have been banking with Chase and had credit cards open in the US for almost 2 years. 40% down is a big chunk of equity!

Not a ton of useable equity there. 

Usually a decent house with low equity.

your issue is not one of money, its one of priorities. your tenant no longer prioritizes rent, because you have allowed your agent to deliver the message that rent does not need to come first. when the tenant knows her roof is on the line, she will let other bills fall to the side in favor of rent. 

The client used another contractor that did it for cheaper as a favor.

Do you have a lot of equity in the property?