@Callum SinclairThis is a month-old post, so I'm probably late.The simplest and most effective setup is usually to keep the whole business under your name or an LLC that is 100% owned by you, and set up your family members as lenders, as opposed to partners.If funding the deal makes it impossible, due say to your credit, then you can reverse: have your dad own the property under his name or his LLC, and set yourself up as a contractor for him.Bottom line: it is case by case.

The biggest factor though is trust, and it can be nearly impossible for a lot of people to trust something they can't talk to/meet with in person.

Although it's impossible to tell, I would be curious to know who the buyers have been. 

In terms of financing, it will be difficult to get for your first deal (not impossible, just harder).

Deals are getting a bit skinny in Lansing, but not impossible to find if you are patient.

This makes it nearly impossible for an owner to do the ‘right thing’.  

They call me a day later saying the leak is getting worse and it is so hot outside it is "impossible" to turn the ac off.

It's impossible to steer a car that isn't moving.

Even in a rapidly appreciating market, this is near impossible to achieve in one year if the original home is close to turnkey at purchase.I spoke with my mortgage broker yesterday and he told me there is a product that recently started being offered that is called a VA Renovation loan (I am looking to do the same thing you are). 

Changing it legally to a 3-unit may be doable, or may be next to impossible depending on your town/city.