First off these are illegal in my neighbourhood, and secondly, even if I tried to get away with it, the city is aggressively trying to get rid of these and it's simply not a risk I'm willing to take.Therefore, I need to rent the house as a single unit, and I will likely end up with a number of student applicants, and I'm not sure what the best way to screen them is. 

Is there actually more risk rather than less risk in your percentages? 

Income is strong, but there is opportunity to improve upon the current rent role with a few thousand invested in a basic clean up.At the risk of sounding like a total newby... 

You end up developing and refining systems that lower the risks. 

He used that to show the risks you take if you do things wrong. 

If the money being risked is all mine the deal is going to be at least 50/50.

Also wondering if I'm taking on any legal risk by participating or not participating? 

Do you think it will be an issue to get them out after we close (a short closing is probably part of the reason we won the bid), or should we push them to get the renters out before we close and risk losing the deal?

There isn’t a good answer to this without more information about the investor’s free time available to manage/improve property, current inventory of skills and abilities, risk tolerance, end goal, and time horizon.  

It also can provide income without too much risk as long as they've received a sizable down payment and properly filed lien on the property.