Need insight on this SFH situation.

[Mark Taleon]

Hello BP investors. I am just starting out my REI journey and still learning the ropes of everything. My family is currently undergoing a dilemma with a paid off property in San Jacinto, California.

Heres the situation, and let me know what things to look for, how to come about this situation, what could be the best possible strategy to use, etc. 

My grandpa currently owns a SFH in San Jacinto, CA, bought around the 1980's for max $500k (idk the actual price) and it is actually paid off. He has someone living in the property (my grandpa's wife's daughters niece) (kind of tricky there) that only pays him at least $800 a month. Nobody outside of our bloodline knows that the house is paid off. Since my grandpa's wife is passed already, he has full control of the property, but if he were to sell the house, he would have to pay his wife's family a percentage of the sale, but he doesn't want to do, he would rather take out some type of loan (what loan is best in this situation?) and pay them off with that, BUT if he were to sell the property, he would rather much sell it to us (his family).

so my question here is if I were to bare interest in buying his property (it would be my first) so it stays in our family line, what would be the best way to purchase and finance it (possible house-hack or LTR if I were to purchase it) ? If my grandpa went the route of selling and paying his wife's family, what kind of loan should he look into?