Option 1, this way if he defaults you take owner ship of the property same as a bank would and boot his but to the curb.With option two you may never see your money and he can live there for as long as he chooses.My opinion it is the worst possible thing you can do lending money to a friend.

A felony of the worst kind to a landlord.  

I would normally suggest you are making a mistake even doing mail over forcing ACH payments but my guess is that would assume low income = no bank account or no ability to ACH.

Just feeling fearful of mistakes I'm sure since its the first one.  

Worst case scenario: they enforce it and you're no worse off than you are now. 

Being new and all, I'd rather take things slow and steady as to not make any mistakes or run into any complications.

If you show up and buy a junior lien (2nd, 3rd position, etc.) you will have likely made a huge mistake.  

Don't bother with 2/1s, focus on 3/2s at worst 2/2s.We are buying new legacy nicer 16' wide homes for $26k each where the mfger financed at 8% at 80%.  

I made the mistake of not attending a small claims court date with my lawyer. 

One of the numbers is likely a mistake actually.