You're paying your relatives 4k per month in interest for every 50k invested? 

However, you also want to be able to demonstrate that intent.Factors that would give credibility to your claim could include your normal practice, communications you had with professionals and your relatives as you were buying it, and the specific reasons that would cause you to change your intent from holding to resale.These types of things happen. 

Why would you split anything equally if your relatives are getting the added (huge) benefit of living in the house too?

I would never close on a property without title insurance, and NEVER take title to a property in my own name.Here's why:  you may have total and complete trust that your relative is being 100% honest with you, HOWEVER, what if there is a lien out there that they do not know about? 

EVERYTHING related to your rentals will appear on schedule E- this should be your rental income, all your related expenses, and a net income/loss number for each rental. 

A lien or encumbrance your relative doesn't know about, a neighbor who thinks the fence in the backyard belongs closer to the house your buying reducing the backyard to nothing, an error in the legal description that started three owner's back. 

Will your relatives share in the loss proportional to their investment?

@Nick Hawkins it sounds like the purchase and sales agreement is wrong, The way the lender is looking at it, PP is 125k and your relative is bring 30k to the closing table, The sales agreement should have been for 160k, with 30k gift. your relative will have to pay recapture of depreciation and capital gains tax plus excess gift tax unless a couple owns it.

They are saying that your relative will give you $30k in cash to put down as the down payment. 

how are you paying your relative?