I wanted some feedback on this structure:1.

I am not offering a specific deal, just looking for advice on structuring a deal.

It's a good method for people like you who are in self employed situation. 

You may want to check out this thread:https://www.biggerpockets.com/forums/52/topics/383631-method-for-tracking-income-expensesI described my tracking spreadsheet, and there were some other interesting posts as well.

There are many ways that the IRS has deemed appropriate to allocate tax basis between building(depreciable) and land(non-depreciable).One method is that you may want to see the ratio of land/building allocations of recent homes sold in your area.

This method leaves a lot of stress and unknown factors off the table and limits the pool of potential buyers to serious investors instead of dealing with the potential issues of individual buyers looking to buy a owner-occupied unit. 

I am not aware of any jurisdiction that will allow you to do it on your own as you must first start with a survey and grading plan and then the engineer will determine best practical methods for the stormwater.

Also, there was a chair attached to a structure attached to two trees.

Most jurisdictions allow these to be installed without permit, as long as there's no structural changes. 

@George Blower, the way I would like to structure the deal is as follows: my kiddos would take the distribution of $5500 from their OWN 529 accounts.