I'd love to learn more about your goals and risk tolerance.

(all his risk) He is paying the builder (another brother) just like anyone pays a GC.When it's all said and done, they think they can sell the home for a profit, but they are not sure how to split up the profits, should the ratio be based on the percentages for example 23% to the father-in-law, and then 77% to him?

Thats a reasonable loan and is conservative for downside risk.

Cons:You don't get access to the property so you're taking a much higher risk not knowing the condition of the inside. 

The local bank will evaluate on its value and your credit risk,  you will have to have 20% (approx) down though. 

To answer your questions Mr Rich Weese, I have done the following to mitigate most if not all the risks for the investors1.

Overall, there’s less risk to lenders, so they’re more likely to offer you better terms – a big upside to the whole process.What are the Downsides to Such a Move?

They have said that taking on the risk of the loan is why they feel comfortable with a 60/40 split.

@Kwame KnightsHi Kwamethese types of deals pose a lot more risk, especially for an investor who has yet to purchase a multifamily.

But I guess no risk, no reward, right?