@Amit M.There's no need to make silent jabs at people trying to help.

I amworking with a lender right now to get pre approved and would be looking to buy staring sometime in the Fall.

Case 1 meets the 1% while Case 2 falls just short at 0.9375% (I handled all that hard math for you guys). 

Believe it or not borrowers tend to fall asleep at the wheel unless they have to write a check each month.

My partner contributed his land, and found his own 'silent' capital partners - so the attorneys had to negotiate some defensive clauses to ensure each of our 'sides' were protected.Since he is contributing the land, but you are contributing actual capital, consider having your lawyer negotiate a clause where you both are 50/50 voting partners (and both guarantors to the loan), but you get all the income distribution (minus what your partner requires for annual taxes) until your capital is repaid; you can even specify who gets what percentage of the tax depreciation credit. 

When you have less than 4 units in most states, you don't fall under codified landlord-tenant law, so if you're really cash strapped you can put the $1000-3000 in security deposits in your bank account and fix up your house with this money in the beginning.

If you refi with 3700 PITI and 370 vacancy then that falls to -450 CF.

I am originally from Sioux Falls, South Dakota but I am in the Army currently stationed at Fort Carson here in Colorado.

I'd need to BRRR and pull everything out plus some...meaning I'd have a great ROI because I'd have nothing invested...On the other hand, if a SFR yielded 1300/mo cashflow, I might be happy with as low as a 10% ROI because of the absolute dollar amount returned for my amount of effort.Where you fall on this spectrum also depends largely on how much capitol you have to work with and where you are in life with respect to your goals. 

If this is just a trial to see how the partnership will go and he will be a 100% investment silent partner for future deals then I would take the current deal as he proposed.