I'm a pretty big advocate for the south side of chicago where you can find properties half that value and cashflow really really well in turnkey condition. 

I don't really want to invest in a D-class area.Tangentially, what are some of your "it's time to sell this property" red lines when it comes to the changing economic conditions of an area? 

My condition was that they rent the house for 1% of the costs and sign a 3 year lease.

The only instance where it might be more beneficial to do it this way vs. getting financing right off the bat is if you need to be SUPER competitive with your offers in your market.

I don't have experience renting in California, but if your competition includes it, I'd probably want to consider it too.

The rest of the home was kept in good condition for resale.

Like others said, there's no specific area that you could invest but rather the area where you have a competitive advantage.

If I put myself in the shoes of the outside partner/investor friend, I would be very concerned because: 1) unclear and/or potentially conflicting business plan, 2) even with clarity in the BRRRR business plan, unclear in the viability of pulling it off with these market conditions, 3) the chances of dispute seems very high, especially if you're going to live in. 4 years ago, I went through a  similar thought process when purchasing an investing property with mainly my family money, while considering an outside investor to rehab for higher STR ROI... 

The rest of the home was kept in good condition for resale.

Every investor has their own path, and hearing different perspectives will only enrich your journey.Challenges in Real Estate Investing:Finding deals: In competitive markets, it can be tough to find good deals that make sense financially.Capital and financing: Finding funding, especially as a new investor, can sometimes be challenging.Dealing with tenants: Managing rental properties and dealing with tenants can be tricky, especially with issues like late rent or property damage.Market risk: Real estate markets fluctuate, and external factors (like economic shifts or local development projects) can impact property values.I’d be happy to continue the conversation if you want to dive deeper into any of these topics!