If the 165 ARV is based on the bad layout, you could compare the cost of a floor plan change to how much it would increase the ARV. 

Residential uses Comps (Comparable Sells) to determine the value.  

For tax return purposes, if you pay him interest, he needs report as interest income on his tax return.

Rent is based on market rent of comparable size and quality rentals.

Rental real estate often generates losses for tax purposes even when there is positive cash flow.

If you invest this money in the flips, you will owe bigger taxes compared to rentals activity. 

On Zillow it’s zestimate is around $49,000 while comparable homes range from $26-$86k.  

Put the zip code into a realtor site and search within a range of a 1/2 mile and see what houses are selling for that have comparable features as this one.  3.  

I would take a look at comparables to see what the highest priced property has sold for along with the lowest. 

This allows you to isolate the single note to easily determine profit or loss.Separate QB files may have to be consolidated for tax purposes, but that should be far less frequently than reporting to JV partners.That’s my “solution”I hope it helps.