Since he doesn't officially have a CO to live in his apartment though, he tells the friend that they have to say they all live in the house together as roommates.The "friend" turns out to be a horrible renter, drinking and being loud and disruptive at all hours.

That would be cool in a major tech hub like Austin where a co-working / co-living hybrid space would be appealing with a particular type of renter.

My primary residence has approximately 120k of equity and I'm a co-owner of another home (will refinance my father out of it in 6 months) with approximately 300-400k of equity.

I rent the apartment for 500 + 1/3 bills to a co-worker which is extremely low around here but over all makes it very cheap for me to live in.

I have a co-worker in my day job that makes that drive, and she complains about it all the time and is late for meetings on a regular basis due to wrecks.  

I do own a co-op in Manhattan.

She could get into an accident running an errand for you and the plaintiff's attorney will be happy to prove she was your employee at the time and you will be a co-defendant, and then the government guys show up with back taxes and fines.etc.Now for paying a percent of each deal.

If they are a married couple, a co-signor (who would have full rights of a tenant) make less sense.  

I don't think you'll regret it.A couple people mentioned finding a co-signer or hard money which both are great options.

Another factor is that I am married and my spouses income is to be considered as well.It looks like I will need a co-signer if i go through with this, its not my favorite option for sake of independence but If I want this then I will do it.