Obviously this would require a considerable amount of trust that they would see the project through and also that they would not be padding payments to subs but aside from the trust factors (which could be mitigated to some extent by appropriate legal terms) does this seem like a reasonably fair arrangement?

Langer) normally just bought everyone out.. but on occasion when the loans were too big .. we did have some bru ha ha s over foreclosing and then get a hold out and it put a monkey wrench into the process until we could buy their interest out or get them to cooperate.. this can be mitigated with an agreement up front.. 

I'll need to ask my friend what he's done to mitigate the negatives that roommating your units can lead to.

My personal recommendation is to strategize with risk mitigation in mind, not capitalize on potential market changes.

If someone files a complaint, you have to be able to show that your restrictions are reasonable and not unfairly biased against people with kids.Everything rule or policy should be designed to mitigate your risk.

If you're worried about all these factors, one way to mitigate a lot of that is to have a down payment AND some reserves saved up.

This is how I see it.. 259,000.00 Sales Price 64,750.00 Down Payment (25% Down) 10,000.00 Updating fourplex 74,750.00 total cash Investment . 1,294.00 Principal and Interest - assuming a 7% interest rate 580.00 HOA 400.00 Water - (may be mitigated via coin laundry)  447.00 Taxes 103.00 Insurance (may be mitigated via insurance credits) 200.00 Repairs (monthly estimate) 3,024.00 Total Expenses - Cash Outflows (3,800.00) Rental Income - Cash inflows . 776.00 Monthly Cash Inflow 9,312.00 Yearly Cash Inflow 12.46% ROI (not included here is capital appreciation)

Any reason to reject any applicant is reason enough to do so to mitigate your risk.Always consider the worse case scenario when selecting applicants to screen, assuming the best will only lead to trouble.

If he's good but just dropped the ball, he should have mitigated this with the tenant and given you solutions, not problems. 

For safety sake in order to mitigate your risk do not rent to 1st year students.