That part does make some sense, especially since the first property we're looking at is out of state and it would cut back on legal fees to just file in that state. 

A few things I noticed (1) you didn't include gas in your expenses (2) management expense at 6% seems low - I've used companies <10% before and I paid for it (3) billing back utilities via RUBS (Ratio Utility Billing System) is a legal, extremely economical way to bill tenants their fair share on a master metered property, however, make sure your state statues support it and is fairly commonplace with your competition. 

You then have to direct the custodian to do something with your money in a legally allowed investment.

And to your last sentence, I'm not sure there is a workaround to avoid mortgage lending rules, especially if your loan is to a borrower who is also occupying the home (given how sensitive the CFPB is with owner-occupied loans).Sorry for the segue...https://www.nolo.com/legal-encyclopedia/whats-the-...

You want to have an idea about the home's legal use in order to figure if it's a deal. 

I have heard of many states where landlords cannot bill for their time. you should not do so without confirming that this is legal in your state.

They both insist that there are creative ways to structure this deal so that me and my mother can LEGALLY , and secured by CONRACT, be able to collect the net proceeds, and split it 50/50 as her and I agreed from the start.One of the proposed arrangements I researched and sought legal consul for, and am fairly certain would in fact still be an act of fraud.A broker brought in an investor who proposed the idea of purchasing the Mortgage Note, and giving us the difference, secured of course in advance by a contract where we would agree to forfeit the Security(house) once the note was purchased. 

I am an electrical designer and I have my LEED Green Associate Credential from USGBC.

@Ramzi Nuseibeh yes, you can have more than one property and should hold that money in a designated account separate from other funds.

But the reason is that here in Texas most duplexes are two separate properties that are attached... and you cannot apply a single loan for two different legal properties.