Therefore, even if allowed in your state, update your lease to specify that this payment is considered "pre-paid rent," not a security deposit (which has cap/restrictive laws separate from those mentioned).

What I think I understand now is that, for instance,, if the taxes due for the bid year are $500 and you win at $5000,  the extra $4500 is essentially pre-paid 2009-2013 taxes for when you get the deed. 

If you accept debit card payments then your tenant could buy a re-loadable prepaid debit card at a major retailer like Walmart.

It could be a pre-paid credit card. 

One year and lot take downs start mid Nov. so we will start getting paid down then.. 120 days of pre paid interest. then he can payoff at anytime..

Also consider a portion of your funds for a prepaid college plan if available as you might be able to beat inflation.

This will determine your options, ranging from:Currently free & clear on a property valued at $110k: Cash out refinance at 75% LTV gets you $82,500 in your cash out (ignoring closing costs and prepaids).

So when I say "pre-pay" that means Jan1st, there paying rent for Feb, because Jan is "pre-paid".

Institutional or registered lenders are often exempt from usury laws, individual, unregistered, private lenders are usually not exempt, check your state usury laws.Paying any fee to obtain a loan is considered points, points are pre-paid interest, points are paid to institutional or registered lenders, not individuals. 

@Dani Foster you haven't shared how much in savings you have...FHA loans require 3.5% down and allow the seller to cover up to 6% of the sales price in closing costs, prepaids & escrow amounts.Although FHA allows a borrower to use 75% of a lease to offset the mortgage payments, doubt your $40k income will allow you to qualify for $250k purchase amount.