I own a SFH and duplex and I'm looking to move into apartments.

My friend and I had an idea to purchase a duplex together, live in one side, and rent out the other side.

(Bad credit is phone bills to collection and visa often late).The exit strategy is repay the property tax and put on mortgage on an 15 year amort so it will have at roughly 75% LTV in 2 years and refinance with a MIC.My concerns are as followings:If they do not pay I will either lose roughly $20,000 assuming an exit price of $130k or own a property (it's a duplex) that would have roughly IRR of 8% on a 3 year hold in a town that I do want want to own a rental in.The borrowers have enough money to pay as things are now.

I don't want to chance it and what nasty residue is left on the walls that I will have to clean off. 

@Avery Carl:  I'm looking for a duplex first.

I would think you would just need walls in but you need to see what is covered under the Master

If you and your wife are truly open to sharing walls with your tenants then house-hacking a multi-unit is always a great option.

On my request, USREEB sent a Structural engineer and this is from his report based on visual review: "The foundation walls of the house have experienced some common movements for a slab and the house shows signs of some stress cracks which have been patched in the past.

I'm in escrow on my first duplex (first property as well), and I'll be living in one and renting the other.

Looks like I can pick up single family homes for $50k or duplexes for $100k.