@John Warren thanks so much, that's where I've landed at about 90% confidence, the only "issue" really is my impatience, so I need to be more disciplined.

If you can sift through the dross and find the one or two gold nuggets hiding in the pan with problematic applicants, you have a tenant who is going to stay with you forever because they know their next lodging is a cardboard box if they screw up.

The problem is the 2 tenants who have many cardboard boxes.

Many realtors have informed us, and I have confirmed, that $875 for a 2 bedroom in our area is far below market and almost laughable (we had no issue renting out the top unit at $850).

This test provides a way for issuers of a note to show that the note should not be considered a security, by showing that the note has a "family resemblance" to other investments that are not considered securities. 

Jack is in graduate school with little to no income, but enough in savings to pay his share without any issue. Rent

You have an exemption, as an issuer, in most circumstances from being an investment advisor. 2.)

It is complex for at least two reasons:Regulations can vary along multiple dimensions such as asset type, investor type, buyer jurisdiction, seller jurisdiction, and issuer jurisdiction.

As @Maxwell Manatt points out- does everyone know their role and what is expected from them - because unperformed duties do not raise someone to the level of a sponsor/issuer and may create the presumption that the specific person is indeed an investor who actually purchased a security. 

I'll invest in a cardboard box if the numbers work haha