Tell that person and the other 3 to read the legal binding contract they signed .  

(yes there was legal paperwork but not any kind of presentation.) 

Evict her as soon as you legally can.

Seek competent, local, non-salesman angle legal advice on equity protection when you get there!

Here in GA small towns / rural areas locals will do something stupid like this, often to house relatives all jammed together on one legal lot. 

That’s exactly what made sense to me and legally I didn thInk terms could be changed after signed agreements.

It is important to know what types of legal entities they will lend to.

If you want to be into rentals know how to raise money legally and form Partnerships so you can invest in apartment complexes.Once you start buying a minimum of a 32 unit apartment complexes you'll be able to hire a Property Management Company to take care of the daily operations including the maintenance and tenant screening and still make a positive cash flow. 

If we rent the home to him, and he lives in it (legally, has utilities in his name, etc.), as a tenant, he can do work on the home without needing to be an employee, correct? 

If I read your post correctly, it's legal to use more than one money partner on a deal, but you have to have your legal paperwork in order to do so.