It's completely dependent on negotiation -- between the operating partners and the capital partners.Typically what you'll find in similar situations is either an LLC or an LP taxed as a partnership with a strong operating agreement in place that spells out income/loss allocation. 

3) Allocate the gas, water, and garbage costs to your tenants rather than paying for it out of pocket.

With rents usually due on the first, and utility bills rarely matching the dates of the rent, it is difficult to allocate rents and the beginning and end of rent periods.

I could allocate cash up front, just not sure how much to allocate.

It lowers your tax burden, you can allocate assets across other investments and diversify and as @Matt K. is right, historically 8.0% is about what you can expect on a mortgage so getting 5.5-6.0% is historically cheap money.

@Eric Haug , if the lock is for the AirBNB's room, it is fully deductible, If it for the front door, it is expenses allocable to the common areas which are not deductible. 

In general you will have a higher allocation of risk in a smaller sub-market like this "micro"-market. 

Finding the houses or how to allocate my cash isn't my question today.My question is, instead of just buying 3 of these 60k houses outright in cash and not being able to use leverage, I would obviously prefer to get loans and use leverage in order to increase my cash on cash return.  

There certainly is a cost to the broker but a local/regional bank typically has a portfolio allocation limit that may limit what they can offer you no matter how good the property is. 

I manage the properties myself and I like to save the property management fee and allocate it towards repairs instead.