Get the occupancy they are proposing and if it is a single family or multiple unrelated people. 

As we know housing doesn't paid for more garage space, with the proposed cut around $9.5 billion in 2018, my rent is not getting SAFMR (small area fare market rent) if I include 3 car garage.   

I know i got a nasty gram from the state when i proposed to do just one loan for someone.. and its next to impossible to find a guy like me NMLS licensed and state licensed to write these small loans for others.. simply no money in it..not worth the time.when most RMLO s can work on a regular bigger loan and make 5 to 15k fee.. 

Interior has a walled and lockable 14'x12' office, large overhead door.Main driver of this proposal wants to continue using the space, and feels somewhat entitled due to them having performed some infrequent light building maintenance and lawn mowing over the years.

Hardship and grandfather provisions are typically included in a rental restriction, so monitor the discussion and proposed language, should your board contemplate the restriction.

@Bret ClayborneThe IRS allows any "reasonable" allocation method, and I can't think of a more reasonable one than what @Logan Allec proposed.

anyhow, my agent proposed this property to me purchase price $185k arv $370k with a $60k reno budget.

He has now proposed to complete the renovation of my multi-family in exchange for ownership of the other property.

There are several legal concerns with your proposed business model which should be reviewed by a local attorney before you begin leasing.

My thoughts/advice on your situation are:A triplex at $180K, and after a discount at $165K sounds great.An option to consider:Being that it doesn't cash flow at current rents, have you thought of 'making' the deal work, meaning you reduce your offering price and then you could possibly cash flow.I also think what you're proposing is reasonable, but the rent increases need to be incremental and sensible.