The city has never had an issue with this arrangement for long term rentals.Being a small town in Missouri, short term rentals are new to them. 

Are there any verbal agreements or arrangements between the current Landlord and Tenant?

Or you can ask him what he would like yall to do with his stuff and he can probably make arrangements himself. 

They act as my trustee and I am very happy with the arrangement.

we did a similar (and legal) arrangement when we rented out our in-law.

Question…should I just have him be my contractor or could we partner on some deals-I put up the money for property and/or repairs then we split some equity in the property or some arrangement or am I making it more complicated than it needs to be.  

I am willing to consider all possibilities to arrange financing. 

For the investor their is the whole note option like you discuss.in states that it is legal ( like CA ) fractionalized loans arranged by a broker is quite common. 

I own 2 properties in CA and I have contemplated selling for past few years for this same reason.

An equity investor stays in the deal and you share in profits and losses on a percentage basis depending on your agreement.You can arrange the payback after all expenses which can include capex and reserves.