For tax purposes, both investors would simply report 1/2 of all income and expenses on their respective Schedule E.

Before you've owned it long enough to appear on tax returns, an investor friendly lender will just do [ rent * 75% - PITI ].Once it appears on tax returns, if you need/want to exclude the one-time rehab expenses, put it on line 19 of schedule e with the comment "see statement X," and then statement X in extreme detail lists all the repair and rehab work you did, and furthermore you can provide me with every single receipt/invoice, exactly matching the line 19 number, exactly down to the penny (so, it's best just to make each invoice/receipt be a line-item on statement X... if Contractor John gives you 5 invoices throughout the project, show me 5 line-items).Only one-time repairs/rehab can be discounted from the mortgage DTI math.

Wifey has found a brand new neighborhood right on the edge of the town limits (no town taxes), in the absolute PERFECT school district for our kids (2.5 years and 6 months) and on top of that a family friend is the RE Agent selling the neighborhood.

The flip side of this is you just hold them in your LLC (w/o filing partnership return) and let them all flow down to your personal tax return (usually your schedule E).  

I mention this because if that $1,000 less is box E, F, and G stuff, that just means the other lender is quoting unrealistically low to 'earn' your business, and the Tax Man's going to come after you for the shortfall one way or another later on.

If the juice isn't worth the squeeze do not squeeze.

What if the fourplex has a brand new roof and the three duplexes will all need a new roof in the next ten years?

I am looking to get into larger multi-family investments and am currently working on content, branding, etc. to launch a new business that will focus on raising capital.

E.

The trick will be finding the B/E point, and that will determine how much you have to leave in.