If you are both working, committed adults then it seems perfectly reasonable for her to pay her portion of rent and living expenses.

The house wasn't perfect; it had a small yard and was farther from city center but everything else was so pretty!

might be a perfect candidate for some sort of short plat. 

Especially when you start to rent out the units, you'll have a hard time choosing tenants as you look for the perfect one, etc.

It's probably worth your while to e-mail them some current pics of the damage as they will likely be surprised it's not in perfect shape, especially if they've relied on tenants to keep the place up and don't use a PM. 

If it’s in an area going up in value, that you enjoy, I say it “counts” in your investing goals, even if it’s not a perfect house hack duplex deal, you took courage and bought SOMETHING and refused to rent the rest of your life.  

In a perfect world (which could happen), lets say we get the borrower to make 12 consecutive payments at $204/month with his loan balance being $14,000.

You can have the perfect plan, but if you can't execute it, it's worthless.

I think you concerns are perfectly valid and it would not be for me. 

And since I"m not hawking my services on BP like you, I will make the perfectly logical assumption your skill set is not nearly what you claim it to be so we are indeed not a good fit for collaboration.