I proposed that because 1/3 is now owner-occupied I would not be paying rent, but that we would split income and expenses (that is solely allocated to the rental units) 50/50 on the other 2 rental units.

@Steve DellaPelle, it CAN get 100% allocated to your principal, but you'd need to advise the Bank EVERY time that the EXTRA $250 is "principal-only".

I am re-allocating out of some value plays into cash flow plays as well. 

Take the size of the property, the CapEx items that will need to be replaced, what they cost to replace on that property, the lifetime of those items, and figure a $/mo amount on each and every item ... add them all up and you have yourself a sensible CapEx allocation.

They bought a single home together, owned as TIC 60/40, and got the following benefits:-A was not going to use the home so often as to require 100% of a home-B&A together have more resources than B alone, so he can get a way nicer home, more amenities, better location, way higher rental revenue-B has hired cleaner/quasi property manager who keeps the property probably nicer than A actually would on their own -B gets to diversify and put the rest of the money he would have allocated to this purchase to a diff home or neighborhoodObviously the agreement is actually fairly complicated and I assume quite rare (I have a particular interest in group purchases, and I only met them because I went looking), but they seemed really happy with it.

I know there are a lot of details but I think it is important to know how much I need to allocate for such a deal if those two financing options were feasible.

What is your overall asset allocation?

You would get the amount allocated to your primary residence tax free and would 1031 the amount allocated to the investment portion. 

@Kevin Phu but you didn’t allocate any to taxes, insurance or maintenance.

Depending on how the investor's portfolio is allocated it may be a risk that is not worth taking.