[aigel]

Some tax considerations:
You will be able to depreciate the unit but you will owe the tax when you sell.
You will owe gains taxes if you sell for a profit.
You can put income against mortgage interest and property tax, so paying it cash may not be the best way to go, if you can get a good loan.
You have to rent out at fair market value, otherwise the tax man will get you for writing off too much vs. an artificially low income.

Some personal level considerations:
This is the kid of your future spouse. What if you don't end up married? What if the kid is a PITA, such as not paying her rent etc.?

And finally - unless a down payment is a GIFT from a relative / friend, you cannot count it as a down payment. A loan is not a down payment and any mortgage company will reject your application. Of course you can lie on your mortgage application, but that would only work if the loan is not documented, which also is not a good idea for the lender (you in this case).

HTH!?

Cheers,

George