However, if you don’t have your own money to get started and this guy is willing to provide advice in addition to capital - it sounds like a pretty darn sweet arrangement for someone without any experience. 

If you are going to pursue obits/probate, then become an expert in everything about that - be able to help answer their questions about the process, help them find an attorney, help them with arranging services for their loved one, learn how to lend money to help them pay for expenses through the process and prior to a sale, etc.

With the new arrangement, I'd be willing to go up to 550k.

We just arranged an agreement with them where investors can deposit their security tokens and earn additional interest and cash flow. 

So far we have found it very difficult to find such an open minded landlord.I don't know if there is a way for us to work together, or maybe you might end up knowing someone in the San Diego area (North Park preferably) who is looking for a tenant for their long-term lease property who might be open for an arrangement like I've described.As for your post, I don't have any experience in the San Diego area (yet!)

The closing agent will arrange for the transfer of any security deposits at closing and will prorate the rent.Again, if you buy a property with the tenants in place, you bought their leases too. 

If this was a 6% or 7% loan, the arrangement would be weird(making a wrap mortgage for more than you owe), but they would not have legally liability.However by charging an interest rate above 8% the loan is classified as a high cost loan.Features of high cost loans include:A prohibition of Balloon paymentsA required disclosure that the loan puts the home at riskAn analysis of the ability to repayThe first 2 are clearly violated and I would not be surprised if the third was also.

if so I would see if you can make an arrangement for rent to be paid and back rent repaid over X amount of time.

Yea I've realized that trying to use my own common sense and good faith in paying bills or making arrangements if I couldn't doesn't apply to many people.

Living on the first floor in a 1/1 arrangement, we run the 2nd floor as an Airbnb.