There may be something called a "Due On Sale" clause.Check and see if all tax parcels are included in one mortgage or if they have separate mortgages.You have to have him spell out what he considers to be a "partial seller financing".

Many community banks will give you credit for proforma rents.  

How do we minimize taxes on the profit we're making on this first home? 

It's a balance of cashflow and wealth accumulation.One of the goals is to have tenants pay as much of your cost-of-ownership as possible (loans, taxes, insurance, etc.)In high-cost areas, any Class A or B property you buy will usually negative cashflow for the first 3-5 years, until rents rise enough to cover the negative cashflow + rising taxes & insurance.Investing OOS increases your risks because you may not know the market and you can't check on everything/everyone all the time.If you move forward with your buddies, HIGHLY recommend creating a solid Partnership Agreement!

Technically it would be best to get a C Corporate or S Corp. to flip properties and since you are considered a dealer if you do several properties a year and this could have negative tax consequences in an LLC.

If you had good credit (670-730 range), you have 20% to make a down payment, and sufficient income to qualify for the home you want to purchase - Would you choose the FIRST-TIME HOME BUYER or CONVENTIONAL purchase option...which would you pick and WHY?

When you file your taxes at the end of the year the accountant is going to ask you for your receipts or what and how much you want to write off using deductions.

B) pay all the remaining rent but I’ll credit it against the kid’s rent next year.

Keep in mind taxes go up as do rents.

Similarly, a credit report fee upfront is reasonable, but these can often be avoided as well.