I want to be an honerable man, and find a way that I can keep these investments as a positive situation.

Property $40,0000 + $3,000 Rehab ($850 Closing) - Rent conservative $700/mo - optimistic $750/mo   (its a 3/1 I have a 2/1 close that I rent for $700 right now)Commercial loan from portfolio lender that will finance upto 85% of broker price option of $50,000 (terms 25yr at 4.35%) as long as DSCR is over 1.25 its over so no issue.Would you ratherA. put 20% down and finance $32,000 ($11,850 in) with $244/mo cashflow on $700  $700/mo- $175 mort- $75 tax- $56 prop man (8%) (I pay 6% because every property over 4 with them drops from 8% to 6%)- $45 ins- $70 repair (10%)- $35 vac (5%) - property management is local and averages 2-3%= $244 ($174 if you figure 10% capex, but some people only do 5% repair then, which would be $209 cash flow)$2,928/$11,850 = 24% cash on cashorB. put 0% down finance $40,000 ($3,850 in) with $200/mo cashflow on $700$700/mo- $219 mortgage- $75 tax- $56 property management (8%) (I pay 6% because every property over 4 with them drops from 8% to 6%) - $45 ins- $70 repair (10%)- $35 vac (5%) - property management is local and averages 2-3% usually 20-30 people per open house I rented my last house in 4 days= $200 ($130 if you figure 10% capex, but some people only do 5% repair then, which would be $165 cash flow)$2,400/$3,850 = 68% cash on cashI live 25 minutes away,  I like the cashflow higher but I have a good W2 job that allows me to invest $2,000 a month of my own income into real estate plus cashflow from properties is all re-invested. 

No problem man!

Then they fill it out with their best friend, childhood buddy, best man at their wedding, salt of the earth kind of person.

..that they essentially have a "middle man"?

On call handy man should be enough

He would be an ideal project manager while still being able to put the tool belt on.My question is, how can I go about incorporating them into my REI operation  to everyone's benefit?  

There may be some sort of a partnership or other legal agreement that would make your family able to provide a down payment, satisfy the bank, not require fraud, and not run afoul of the tax man.

My question to the experienced investors is what type of incorporation did you choose (or wish you chose) and why did it work so well (or not!)?

My question to the experienced investors is what type of incorporation did you choose (or wish you chose) and why did it work so well (or not!)?