If they need you to pay interest for IRS reporting purposes, then you can just do something like agree to pay all the interest on the back-end (at the time of sale), and then adjust equity ownership to reflect the interest payments and even out the total profit split between the two parties.They get their workaround, and you get the 50/50 split you were promised. 

I'd suggest that you budget VERY high for this work and adjust your bid accordingly.  

However, with the new tax laws your adjusted basis of assets is one of the limitations for the QBI deductions so now there are cases where, if qualifying, capitalizing but using bonus on items makes more sense so it's still listed as depreciation- not just an expense.

We were able to experience some of the intensity of the situation (they shot blanks in the building).

You should consider this when renewing a lease and adjust the rent $s accordingly.

The GC you use MUST be knowledgeable in the 203(k) process, as it is bureaucratic and paperwork intensive. 

The front end purchase, the back end refinance and the hard money costs can be capital intensive depending on specifics.

It should have been removed and the terms adjusted as necessary.  

You have to adjust your methods to it or just pass on every deal.

STR can be very lucrative but they can also be very management intensive and your buying criteria is really really important.