I think you got a really good gift but get it legal to be safe.

. :) Yup, borrowed funds secured by some other real estate (like a 2nd mortgage) are fine.Unsecured borrowed funds (or down payment gifts on non-owner occupied homes) are a no-no.Or, if the borrowed funds are enough to buy the whole house and you don't need an Agency 30YF mortgage, then of course the mortgage rules don't matter at all. 

I am unsure of how I should run numbers to see what works.Unsecured borrowed funds and gifts cannot be used as down payment, cash to close, or reserves, if you want an agency 30YF mortgage, without committing fraud.But secured funds can be used.

I am extremely gifted at finding great deals.To start: There is a little 980 sq ft house 3 bed, 1 bath.

As long as they look good, don't look a gift horse in the mouth!

He is gifting me $225k.

See the below analysis;PP - 210k, DP - 42k, CC - $2500, Apprailsal - $500, Rehab - 15k, ARV - 250k Rent UP - $1250, Rent Down - $850, Garage - $300 (blended for 6mth lease) = $28800 - $2500 (2 months for loss of upstairs reno)  = $26300/yearExpenses - VAC - $170, Util - $220, Ins - $200, Prop Tx - $150, Repair - $200, Tenant Gifts - $25 = $11580/year + Mortgage ($706.61/mth) $8480/year = 20020CF              = $6280PA (3%)     = $7500PR              = $3520AA                = $25000Total            = $42300 ROI = $42300/$60000 = 71%Were hoping to have a $1250 upstairs rent for the new tenant and have them pay 60% of the utilities.

I actually want to offer $100k on the duplex and asked for the $7500 to be a gift in equity to do minor repairs.  

That way if all three units are rented out at the same time, I would be able to completely collect from the third unit during the given time frame, almost like an added bonus gift. 

A cash gift?