I will be giving him the reigns to handle and manage the work being done (Paint, flooring, light framing to add a kitchenette, separating utilities, and various finishes). 

I have huge goals but I'm starting with this one first: househacking a multi-family unit, and owning a separate rental until the end of 2020.Sounds reasonable, right? 

@Robert Chuang These 3 doors are all investments I have a separate primary residence so I am not sure how I can make my next investment a primary residence unless there is some loophole I am not aware of.  

The end goal is to have have to have enough parking for a single vehicle per unit, to separate the water and electricity, and to convert the single family into a duplex. 

If audited, you have to prove that the payment did happen. 1099s is a separate issue which the IRS might raise in a audit but usually does not.

Warning though- if you’re ever thinking about moving, some areas won’t allow two separate leases on one property which could limit legal cashflow.

If this is a multi-family, are the utilities on the units metered separately?  

Here the more bedrooms the better so if you can fit 3 that’s great but the city or county you’re in may limit you to 2 depending on size allowed plus if you’re on city water and sewer vs septic that may play a factor as well because they may require a separate septic system which is $$$.

@Dylan Obrecht I've worked w some investors who rented out to college students, one of the benefits was increased rent because they charged separately for each bedroom.

I keep the houses we live in and use separate from those we rent.