Gift of Equity Help and Potential Rental Property

[Marc I.]

Hello BP forum, 

I've been doing a bit of research and keep running into obstacles. Here's my scenario:

My retired parents (who live in another state) would like me to take over their mortgage. Ideally the want to give me a Gift of Equity (market value - remainder of existing mortgage) as a down payment. The twist is, they would be staying in the house and renting from me, making me a landlord and the property an investment (as I understand it). 

From what I've read, Gifts of Equity can't be used towards investment properties (only primary and second homes), and I don't think the lender will allow it to qualify as a primary (since I'm out of state). 

The question is, is there any way to take over my parents mortgage, while still somehow utilizing the Gift of Equity and turning it into an investment property? 

I'm sure someone has run into this issue here. I'd really like to keep the house in the family and establish a real estate portfolio in the process. 

Any help would be greatly appreciated. 

Marc