Because you are essentially buying into an existing business, the sale of it could generate a disproportionate amount of tax for you given your time in this deal.

Considering that, you are likely going to see appreciation year over year, which essentially will be additional equity you'd capture just by simply living in the home. 

Principal balance currently at 314kProperty Details: It's essentially a "2-in-1" property, with the main unit rented out for $1,900/month and an attached ADU bringing in an additional $1,200/month.

As investors we want to maximize revenue but to your point that still requires applying common sense and basic ethical principles.

It sounds like you have an un-permitted unit, which is essentially always a risk since there has been no notice to the AHJ that it exists and they can therefore initiate a code case to have it removed in most cases.

So essentially whom ever is paying them or they single out is the lender you get stuck with and it may not be the best one.

A formal business built on this seems overkill as you’re essentially paying someone for a service that already has standard model.If you and the parnter have distinct business tasks/abilities (i.e. not what you would hire an agent or contractor for), such as off-market lead generation, that’s a different discussion.

It’s affordable and easy to set up, but not essential.

I would keep as much liquid as possible and essentially get you to 20% equity or more by renovating the property. 

We have education in real estate principles, real estate law and real estate finance.