Simply let them know you want to transfer ownership but not payment. 

If you remove yourself from the deed, you are gifting your ownership to your dad which may require the filing of a gift tax return.

Your local S8 Housing Commission should have an info sheet on their website that shows their deductions if landlord chooses not to include electric, gas & water.Even more critical, your $680 mortgage amount, that you appear to be comparing to the S8 rent, should include ALL the other housing ownership costs: property taxes, insurance, vacancy/tenant nonperformance (S8 tenant may have to pay part of rent), maintenance & miscellaneous.Suggest you use the BP Calculator for this.

Take ownership of your mistake and learn to do the proper due diligence recommended above😊

This makes it really hands off for the ownership.

He cannot benefit from only myself fulfilling the section 121 requirements. correct, you both need to pass the ownership and use test 

What are other, non-tax, consequences and risks of excluding one of the spouses from the legal ownership?

- I think equity partnership makes the most sense for the investors I know, so how much does a fund manager usually charge and does he bake in a percent ownership, for running/ finding the deal?

You also should list how much $ you are putting into the deal even with ownership of the lots as depending on that equity a lender will require you to start with your own funds. 

No doubt there is money to be made, but the state has overstepped any sense of ownership from the landlord.