So, when this company goes bankrupt, did you get a $20,000 gift from some investors, or does the lien on your property wind up in the hands of their creditors?

Sounds like a really risky idea. Better idea: figure out a better way of coming up with a down payment. I think I'd rather owe money to a hard cash lender than these guys - at least then I'd know who I was dealing with.

Who owns the tax deduction for business use of the home? What happens if no one rents the room? Can they rent it for you, to anyone? What if you have some kind of accident? Who pays. What if renters burn down your home? (Happened to me). Who pays for that? What could possibly go wrong with this stupid idea, and why would anyone think a hedge fund would offer you a good deal on anything?

Who pays the taxes on this? Not them, I'm guessing. You okay with that?