I trust my friend, but I'm hesitant on transferring my money to an LLC in which he controls 50% -- in other words, if things went south, there goes half my money...Has anyone done a similar arrangement?

But I would make sure both of you are perfectly happy with the arrangement. 

Those can run several thousand dollars so the type of arrangement you describe typically does not work on smaller properties.

My options include bringing in someone under an arbitrage arrangement.

Taxes--if the arrangement is that the buyer pays taxes, the property will be subject to tax lien if buyer does not pay. 

I'd recommend the same: find something in that 175-260 range, claim your room, fully vet and screen your tenants/roommates and put the arrangement in writing.

I would suggest that you document this arrangement in writing so that there is no misunderstanding later. 

I would also arrange a surprise visit during a flip until you are 100% sure you can trust your contractor.

In some instances I've filed myself ($29.00) and then just arranged for the attorney to represent me in court.

They were very happy with this arrangement.