Ultimately a house and garage for us, rental cabins for the investment portion. 

Mainly the initial portion to get the work started.

As the 80% portion gets paid down by your tenants, that recovered equity you will be able to borrow against in the future.

Maybe look at this setup: http://mpgroupcpa.com/post/3-tier-corporate-structure-real-estate-investors/@Jacob Perez was right on what it takes to get a mortgage, income, credit, the house and down payment.For rental units the banks consider 50% of the rental income as the portion that can count towards your income.As for credit, a cell phone on a contract and a credit card are great ways to build up credit fast.

Since he owns the property through an LLC, he is willing to allow me to buy equity into the partnership now with the $50k cash, with the option of purchasing another portion of the partnership next year.

He's looking to rent the home out and move in the near future.He's interested but highly apprehensive because he fears what the refinance portion will do to his DTI%.

FMV at time of conversionAlso, something to keep in mind is allocating a certain portion of the house to land. 

It's a smaller property management portion of their larger Real Estate Agency. 

Does the portion of the report indicate that the original Deed of Trust was transferred and is still just one deed or that a second Deed of Trust was put against the property and therefore there are two loans with a first and second position?

After you start paying  income taxes, showing depreciation on the rental portion of your house (which will have to be recaptured at sale) and lose the tax free capital gains on the portion of your previous primary house that’s now a rental it could cost you thousands in taxes.