I put down 25% down payment, and got a loan for 75% of the purchase price so I have $53,475 equity in the condo.

Under lease agreement, tenant has 3 day grace period before late payment.

For example, I may collect an 8 percent interest only monthly payment on the principal balance and 10 percent of the equity in the future when the loan matures.

I would prefer interest only payments during the rehab period, if possible.

So to start this is a master lease and the terms are as follows.Rent paid to seller monthly: $1,500Down payment: $40,000Option to purchase property in 5 years for $175,000Or scenario 2 (whichever seller picks)Option to purchase property in 10 years for $125,000A little about the propertyLocation: Rural area so some rent increases and appreciation but nothing drastic4 units with rents at marketCondition: 4/10 livable but outdated and some deferred maintenanceMonthly NOI: $1,861Market Cap Rate: 9%Is this a good deal or would I be screwing myself?

If you have a 33% down payment, you may be able to put a commercial loan on it.

It doesn't make sense be in a -$800 a month (at best) while paying a huge monthly payment with high property taxes.

He is taking out an equity loan on the house of about $120k to make home improvements and was gonna use $50k of that to get me a car and I make payments to him instead of the bank. 

Im not against either just looking for the most bang for buck method. 

After researching and learning more about real estate investing using the BRRRR method.