The foreclosure process is complex and full of pitfalls, I would strongly suggest consulting with a Real Estate Attorney in your locality; depending on how your set up, you may be able to write off the expenses incurred in obtaing the legal advice. 

In other words, have I brought $300,000 to the table vs. my partner's $50,000 OR have we each brought $50,000 to the table, and the interest on the loan is just an expense like any other?

I haven't done this yet because I'm still searching for my first deal, but here's what I'm going to do when I find one.I certainly would ask for minimum 1 year operating expenses statement, and rent roll from the seller.You also want to get what's called an Estoppel agreement filled out from each of the tenants.

As you have more cash on hand you are able to look into more expensive areas too. 

After I move, my brother and his friend would rent the space out for a place to work during the day providing me with a potential 300 - 500 in monthly cash flow assuming a 30% expense rate.

Just to set the record straight here on BP the term House-hacker refers to a multi-family residence where you live in 1 unit for low or no rent because your tenants rent is coving expenses.

It is easy to tear stuff up, and you will save a pretty penny if you do so.Go to the home depot, home emporium, lowes, lumber liquidators, everywhere and get your prices on paper.Labor is expensive, but if it sounds like a ridiculous number, it probably is. 

There are options for borrowing with little deposit but in this market they may prove expensive.

Deduct these expense from the deposit prior to returning.  

Let them know that if it comes to that, they will be responsible for their share of the treatment costs as well as any legal fees and collections costs which will make it much more expensive.