They would have a note secured by re worth double their investment.  

It will also keep your Social Security number private.

The landlord also want three month security (12000) for a destroyed store.    

Also after the year is up for the FHA loan how easy would it be to secure another loan for another rental opportunity?

I currently have about $3000 for down payment but am able to secure more quickly.

@Jon Holdman  alienation clauses are in the Mortgage not the note... generally... note is promise to pay and spells out the terms of repayment etc... of course some have dual purpose language but mine that I do all have the alinenation in the mort or deed of trust or deed to secure debt that is recorded giving the world notice that if title is alienated that that is an event of default and at my sole discretion I can call all sums due and payable.

(I prefer to try to bargain with the tenant by giving some of their security deposit back if they leave quickly without problems before it is used up in back rent owed.)  

As for private lenders, that's a different story since they are individual people who may be happy with the arrangement you propose as long as their investment is secured and they receive the return you promised.I would think that the rates you would pay a private lender would make the investment a loss since you're going to be paying a higher rate.

It is possible the Interviewee is just using the wrong terminology for a Deed in Lieu but a Mortgagee does not 'pay' for the property since they already lent money secured by the property.  

Also, for the security deposit, if you are thinking about returning a portion to the out-going tenant, don't.