I'm a newbie in the Dallas area looking to learn and build relationships with others in the business.  

A face-to-face first meeting and conversation were invaluable in developing this relationship. 

Well typically you'd want to get a lawyer involved to draw up a contract, since he's your brother I'm not sure if that's what you want to do but regardless you need to agree on the terms of the business relationship beforehand to prevent any disagreements and disputes:1) Who makes major decisions (ie renovations, evictions, selecting tenants, etc.).

The self dealing seems to be out of play because there really isnt a rule that says a close relationship cant buy something from you. 

Starting out you're going to take a beating on the terms because you don't have a relationship yet but if the numbers work then them making an extra couple grand doesn't matter 

depends on where it is.. how much your paying and what you want to do with it. for instance in SC  tax sales take for ever to clear title.. so if I could buy say an old dump there in a historic gentrifying area .. for peanuts and just rent it right away and did not need to get a loan or sell it.. 

*This post does not create an attorney-client nor a CPA-client relationship. 

The town is a super interesting historical place, recently discovered by the world and now FULL of tourists from all over the world year round. 

San Diego historically has one of the best ROI for buy n hold RE in the country. 

And they don't want to take the time and effort to learn the basics of a market and build the proper relationships it takes to invest from afar.I fell into the trap a couple years ago...went the turnkey route...was tempted by the "amazing" and quick returns on a $37,000 property....got burned.But, I'm trying to grow, improve, learn more.