Transferring a building between family

[Matt Haaga]

My dad owns a duplex outright, valued ~350k, and renting for $2,200/mo. The return on equity isn't ideal, but he's retired and holds the property as a stable source of income. 

He doesn't like being a landlord. I have offered to buy the property from him, owner financed, to maintain his stable income, but he says it doesn't make sense to increase the cost basis of the property and pay capital gains on the sale (he intends to leave the property to me, and my understanding is that the cost basis would therefore step up at inheritance and avoid the tax liability). 

His idea is to lease me the property long-term. I would pay him $1,250/mo and collect any income above that amount. I would pay for all maintenance, turnover, etc. Again, I'm ultimately inheriting the property, and while I know that relying on anything that far in the future isn't ideal, the income seems secure for now with no initial capital investment, and it's likely that any equity gain through improvements would be transferred to me in the future. 

Has anyone ever set up a deal like this within their family? Are there other, more creative options that avoid the capital gains tax but effectively transfer the property or income into my name? Do any red flags go up on reading this idea? 

Thanks for the feedback!