We have consulted with an attorney, who after looking at our paperwork said the same thing.  

I gave her a call and turns out she already has it under contract and getting ready to push the paperwork through.

That would require additional paperwork and fees that are likely not necessary.

@Will JoThe bank makes you sign paperwork saying that the home will be your primary residence, but to be honest I never had anyone check on me throughout the time I've been living there.

What are the steps, inquiries, paperwork, etc to finding someone like you and doing a really good, secure HML deal?

I've heard about paperwork you can file for abandonment and later sell it as scrap.

There are existing tenants but no lease (no paperwork) and the rents are lower than market.

The problems with fractional ownership and paperwork are replaced with increased fees to the investor.I've also experienced 2 foreclosures on investments through the CF sites, along with a handful of deals that had other challenges (all capital and interest paid, but late payments, going beyond the term, etc).

He still have not offered any paperwork or anything.  

If your friends are serious about investing with you, I would get all the paperwork put together, figure out how you are going to structure the business entity and open a bank account with the funds ready to go.