How would this work (and, is it possible)?

[Jose Matuk]

Hi everyone, I have a basic question but need to clear it up. I currently have a property that I lease out. The numbers are:

Purchase price: 285k

Upgrades: 35k

Current market value: ~345k

Amount owed to the bank: 240k

The lease pays for the mortgage and some change, which I save for maintenance (so no cash flow). I'm not sure if the tenants are going to renew at the end of the term, which is at the end of this month, although they can just go to month by month. If they renew, I get one more year of "free" mortgage, but if not, it might be a good time to sell. 

The reason is that I want to buy a SFH (B&H) to live in (in my current location), and I could really use some cash for a down payment.

However, I really believe that the house will appreciate a lot more and I really like the location, so I was thinking maybe doing a B&H partnership with a friend who's interested in starting with REI (co-proprietary B&H if you will).

I suppose that for this I could ask him for half of the current equity (around $50k), then change the deed, mortgage, etc. to the co-ownership. But I don't know how to factor in upgrades, or if I should.

Can this be done? Would it be correct, legal, viable? Has anyone done this and do you recommend it?

Thanks in advance.