I can guarantee you will end up rationalizing a bad deal into a good one as you get closer to that date without a deal. 

Don't rationalize a lower cash flow.  

If you focus (as it should be) is to make money, then I don't see any dilemma at all.You're trying to rationalize a bad deal into a good one. 

I have contacts who I'd like to talk about a potential capital/sweat equity partnership with, however, I would like to be as well-researched as possible before I do so.I'm wondering: how rational is it to propose a capital/sweat equity partnership for a multifamily, where the sweat would initially occupy a unit?

Hi  I know you get all sorts of letters from those claiming to be buyers and will pay cash on a date of your choosing .But let me tell you reality the vast majority are not buyers they are just looking to tie up your property so they can flip the contract and make what in essence any rational person would deduce is a real estate brokerage fee and the more they make the less you make and the better for them.When you get these letters if your interested first thing you want to do is have them provide an actual bank account showing the cash amount to purchase your home is available.

Rationalization is the most expensive word in the REI vocabulary 

Not only are there fewer friends this way, but it takes much longer to get to where you want to go.Trying to ride just one bus, and expecting to get to that magical destination, is hard and expensive...and you as you notice all those other buses that pass you as you walk, you start rationalizing that they are too expensive to ride, and they all are probably going to the wrong destinations,...even the ones that are clearly marked that are going to where you want to go.Second, the answer to your main question, is "both".

Need to look at your debt to income ration so get a broker that gets this.

Taking the limited route of using just one strategy means you would be missing out on at least 90% of your potential deals, and in the end you would start forcing your strategy onto properties that you have no business doing...then rationalizing that you did a good thing.One trick ponies lose more than they could ever gain.

@Ronald Allen Barney I appreciate how candid and straightforward you answer is, as a banker I am aware of LTV being important but I like the way you framed the percent being misleading, because it makes total rational sense. $10k does sound like a TON in closing costs, but I guess it is always better to play it safe and be happy if it is less.