What does this situation present for you that will help you with our long term goal and how can you use it as a stepping stone to get you there. 

So FHA would defer to my county to determine if I had one or two live-able units?

For further enticement the return could look like this: a certain % on their money for what is called a preferred return (they receive this before any profit sharing) and then they receive a % of any profits that the property makes in any given situation, Fix & Flip or BRRR.There are many ways for this to work but you will have to understand exactly what your private investor is looking for in a return and you should provide them with assurance that their investment is protected as best as it can be via things like them having 1st position on the deed, promissory note signed by you for repayment, the property is purchased at such a discount that if you had to sell it in 30 days in its present condition, they would receive their investment back from the sales proceeds, etc... 

It needs to be a corporation- and holding REI in a corp presents other issues so I'd recommend sitting down with your CPA to see if this option makes sense for you. 

Overall that deal looks great with what you presented. 

I did make 2 offers first was 25k to the table the way it was originally presented. 2.

Risk-taker (You got to be willing to take chances when opportunities present themselves).Personality (in less you have a ton of money already, people will not enjoy working with an a**hole)Outside the box thinker (got to be able to see things that others don't see or not willing to try)Willing to learn (the ability to take good advice as well as seek information to advance your business)Committed (everything isn't going to work as planned so you got to be willing to continue to try)Know when you say no (you got to say no to bad deals and/or partnerships)Please fill free to add or critic my list as you see fit.

I am going to sell some property and am wrestling with whether to 1031 or take the tax hit and sit in the cash.1031: Buy real estate now with tax deferred proceeds and cash flow now with 100% of the proceeds.But when (not if) the next crash comes, could lose up to 40% of value or more. 

If that is the case, I would consider a 1031 exchange to defer your taxes and get yourself into a better deal. 

I'll defer to the collective knowledge of the community on which is a better fit.