So, if they are now retired and in a lower tax bracket than you and your brother, they may pay a lower effective tax rate on any taxable income (if any) from the property in your proposed scenario, than you and your brother would if you just bought it and let them live there.

talk to some folks in your area, share the numbers, get a good lawyer to draw up a partnership agreement...or try to find a private or two lender and propose the deal to them...

@Jennifer Acalinas Since you are interested in fix and flips, I propose the following action plan.

What actually sparked this post was a story I saw on a proposed development at Taylor & Madison (next to the church), trying to cram an apartment complex into the small lot where the vacant bank sits.  

I would like to propose a meeting on the first and third Thursday of each month at Nates in Buda (possible varying location after some initial meetings) at 6:30-8.  

I've been looking at properties they are proposing to be used in their countywide landbanks and from what I can tell some would make great deals, others would be disasters for new investors. 

The partner would not be a part of the proposed LLC, but could be part of the borrowing group, which could accomplish the same goal.

I was thinking doing a promissory note which could work for now but eventually I would like to have more 'Funding partners' Also I'm thinking proposing they put 100% of the cash, I put knowledge and skills and my time I would not charge anything to list and market the property and we go 50/50 on the NET profit.

Looks like the biggest problems with my proposed deal structure is finding private investors to take a 3rd position and a broker willing to give me a loan with none of my own money down plus the fact that I don't have experience. 

Last question is, have you discussed the proposed plan with your 1031 exchange entity?