First, don't underestimate the distraction of hosting and maintaining a separate code base. Now every time you start on a new feature you have to think about two deployments, two separate user bases, perhaps two UIs.
Second, you almost never make money on your first "hosted" deal like this - there are too many one-off things you have to do to get started that don't directly benefit the client so you can't easily charge for them. different deployment systems, hosting, monitoring. support, documentation, perhaps a UI refresh on your ugly admin tool because only you two used it, etc.
Bonus third thought - either charge all operations and support as passthrough, then track and bill hours, or setup a big monthly recurring hosting fee that is enough to make you glad you are getting distracted.
Extra bonus Fourth thought- don't promise feature upgrades. Sell only version 1. Tell them that version 2 is not included and then you can sell them version 2 next year when you have time. It's easy to accidentally promise infinite upgrades or let them assume that any upgrade on your main site they should get free.