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At that price, it is likely a conversion, in a bad area and needs a ton of work.

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If you rented for 2 and lived in it for 8 you would get 80% of the gain.Down the road, if the circumstances again warrant it you could do a reverse conversion and turn that property back into 1031 property so you could 1031 and take some boot out covered by the 121 exemption.  

So I think you potentially could lose either way in the long term mixing family and real estate investing.....Worse yet, you get to revisit these potential ill feelings at each family gathering or in any family conversation.