Also, making some sacrifices can more than make up for lack of capital or experience when getting started.

The HML covered 100% of the $32,500 rehab budget through drawbacks.Refinance: Post-rehab, I refinanced into a primary mortgage, creating 25.5% equity in the property.Future Financing: I plan to leverage the property with a HELOC to access up to $86,000 in capital for future deals.

If you're not putting anything in, then I'd expect that your friend would want to get all of their capital back before you start splitting up the distributions.

Can you find a way to capitalize on their work even if you don't buy "their deal".

When you say you want to prioritize cash flow over equity, you want to watch out for people honing in on that and selling you "good cash flow" deals which will be in D neighborhoods and will come with high capital expenditures and harder tenancies.

You get a Capitalization Rate (CAP Rate), which equals your annualized return by dividing the Net Operating Income (you had gross in your narrative) by the purchase price.

House hacking is generally not as capital intensive so you can continue to make money in stocks/index funds. 

Startup costs paid out of pocket should be recorded as capital contributions and may be deductible as startup expenses or amortized.

Possibly some good opportunities there to (for better or worse) capitalize on the depressed market, but income and infrastructure will take a while to rebound. 

I'm in Open Door Capital's Sunbelt Diversified Portfolio.