It can end up having a negative effect once you realize how much there is to know about real estate.

I also relisted it for $75 *higher* effective now (7:20pm 8/28).How does it look now?

The One Thing, The Compound Effect, anything from Napolean Hill, and Tim Ferriss' books Tools of Titans and Tribe of Mentors are some of my favorites.

What type of real estate lawyer do you practice?

More to the point, the amount of debt through refinancing/cash out financing has No effect on the sellers cap gain tax.

He agreed to selling this way and had told me to have my lawyer draw up a contract.

but if for some reason you had a hiccup or loan got called and the seller is now getting letters that their credit is getting trashed from non payment that's when you will have issues.. generally they lawyer up you get a bunch of nasty grams etc..  

Asking Price 215000 Primary Inputs Purchase Price($) $ 190,000.00 Downpayment(%) 3.5% Units(#) 2 Monthly Rent($) $ 1,150 Occupancy Rate 75% 30 Year Loan Rate(%) 4.50% 15 Year Loan Rate(%) 3.90% Secondary Inputs Closing Costs(%) 6.0% Property Tax(%) 1.8% Insurance(%) 0.8% Maintenance(%) 10.0% Property Management(%) 10.0% Improvements($) $ 20,000.00 Closing Costs($) $ 11,400.00 Inspections/Misc($) $ 600.00  Value (30-Year Mortgage Scenario) Monthly Rent $ 1,725 Annual Rent $ 20,700.00 Value Per 2% Rule $ 86,250 Value Difference (2% Rule) $ (103,750) Annual NOI $ 13,800 ROI (Pre-Tax) 8.36% ROI (Post-Tax) 8.1% CAP Rate (50% Rule) 7.3% CAP Rate (Assumed Expenses) 6.0% Annual Expenses Annual Property Taxes $ 3,420 Annual Maintenance $ 2,070 Annual Insurance $ 1,520 Property Upkeep/Other $ 200 Property Management $ 2,070 Total: $ 9,280  30-Year Mortgage Results Money Down $ 38,650.00 Monthly Gross Rent $ 1,725.00 Monthly Loan Pmnt $ 929.01 Effective Rental Income $ 20,700.00 Annual Loan Pmnts $ 11,148.09 Annual Expenses $ 9,280.00 Total Expenses + Loans $ 20,428.09 Annual Cash-Flow (Pre-Tax) $ 271.91 Annual Return (Cash-Flow + Equity, Pre-Tax) $ 3,229.76 Annual Post-Tax Cash-Flow (Pre-Tax) $ 190.34 

You might go to a Lawyer/Attorney that regularly working on Partnership and he could probably tell what is the best way to go.I think that various books on Partnerships would help you make the right decision. 

No, I'm a lawyer.