@Bosko Mijatovic take a moment and consider if you really want to partner with a family member, especially with such a low FICO score.

I'm relatively new to real estate so I'm hoping you can offer some useful insight.Applicant 1: Excellent credit, low debt-to-income ratio, upper-middle-class income, very little available cash in bank account (cash is mostly in stock and retirement accounts)Applicant 2: Mediocre credit, better-than-average debt-to-income ratio, middle-class income, enough cash available to almost buy home outright.

Or, you may take advantage of the owner occupied FHA loans that have a low down payment. 4-plex's are eligible.

My wife and I currently have an investment property in the Elk Grove area with 140k in equity and a home in North Oak Park with 90k ish in equity that we're currently airbnb'ing but would prefer to not have to go through the hassle of refi or pulling cash out with a traditional bank/credit union.Both have credit scores in the high 700's, low 800's and debt to income ratio of about 25% with a potential of being closer to 10%-15% if my wife finds out she passed the CA Bar this upcoming Friday!

Also your insurance and electricity budgets seems on the low end but I may be biased to that because I live in a place where insurance rates are insane.

Small town Nebraksa generally has low priced real estate.

Please don't confuse with "low income" or "subsidized" housing however.

For example, if I sold 1/2 the balance of the note, the yield DOUBLES to ~20% on a 10% face rate note for the note buyer (unless of course I'm the note buyer, then it's okay :-)Pardon my french, but I will be a son of a b*tch before I pay a totally passive note investor that rate of return in this low interest rate enviroment. 

Will this still be a good deal with the low school rating?

Here is a list of lenders offering such loans:https://www.biggerpockets.com/blogs/2810/50272-lis...I'm really big fan of using retirement funds for private lending,  you can get decent return (10%+), risk is low and it is truly passive.