@Martti Eckert in our opinion, you'll need to be really familiar with construction, including costs, or be able to find somoen on the ground you can REALLY trust (but still verify).

Vacancy hurts a bit more, but the biggest issue with renting out large homes is turnover cost.

The primary risks at this point would be       1) to your lender, the risk of a margin call.       2) To you; underestimating the true cost of a project and cost overruns      3) To you; legal risk of securities regulations if you partner looses money. 

The success of such investments depends heavily on local market conditions, and maintenance and upkeep costs can add up, especially as the property ages.

He owns an asset that is worth (low-end) $300k that generates 2300/month (after all costs).

As mentioned take a smaller cut to complete a deal if necessary.

@Jessica Seppo,Many people take the cost of an LLC and funnel it towards more insurance and an umbrella policy.

The cost associated with insurance for not having 20% is peanuts compared to what you potentially can do leveraging your down payment. 

How much will this unit cost to renovate?  

I would include servicing costs of the loan and licensing costs.