Why do you want to start at a loss, and lose even more money exponentially starting from the day you close?

The inspection revealed rotting and termite damaged structural wood so I don't think rehabbing is feasible or practical.

I'm pretty sure you're onto something.I know that with a typical rental property, you can carry losses forward into the next year.

Don't do it unless you are either willing to eat a loss - perhaps significant - or are OK with ending the friendship. 

The fact is, he will have trouble saving up for 2 down payments within the next year, so if we invest in a property together, it would be ideal he live in the property for his sake.I've suggested that he should pay the full rent in the form of owner contributions (or some other way to not get double taxed on his dollars) to an LLC we would own (we're intending to buy a 6+ unit property) to make up for the loss of income by him occupying the unit.

I don't see me splitting my commission as a loss, you gotta pay to play and experience is worth the price.

The idea is that the BRRRR properties would generate a paper loss yearly (with depreciation, etc.), would I be able to use the "loss" to offset any profit I make from a fix and flip in the same year?  

If the market average is 20, my PM averages 40, then my vacancy loss is DOUBLE the average.

And what happens if you suck at real estate investing and you have to unload the investment property at a loss?

At the end profit/loss will determine if the plan is working.