Take ownership of your mistake and learn to do the proper due diligence recommended above😊I have tried to do about 95% of what you suggested and I keep coming up empty handed when trying to find a decent PMC. 

Once you can properly analyze a t12 and rent roll, then plugging it into a tool will help you spot opportunity.Gino

Sounds like the expectations just weren’t set properly from the get go?  

Let me summarize this for you again, I am not seeking a legal advice, I need hand holding to confirm I am reading the semantics of the deal properly !

Trying to figure out the optimal strategy that will provide liability protection, proper estate transfer at death, and other strategies that can benefit their tax situation.I have my ideas, but want to consult with someone who has estate and tax planning experience in CA.

How to you properly charge the tenants seasonal usage (high in winter/low in summer) and when there's not equal gas appliances between the units? 

Honestly, the proper strategy at this moment would depend on a few factors that would be a bit difficult to get into on this board.

You need to do more than a day of fixups - painting, carpet steam cleaned, cleaning all drawers and appliances, exterior touchups.You have a "perfect" process set out, but it's one that will push you to make a bad tenant decision and not vet them properly.

Taxation can be all about the operating agreement.Short of a proper operating agreement a two member LLC must choose to file as a Partnership on Form 1065, C Corp 1120or S-Corp 1120s.Changing title when the property is mortgaged is another issue.

The second lien also means you’re in a junior position if the buyer defaults, so you’ll want to be aware of that risk too.Overall, owner financing can be a win-win, but it’s important to have everything structured properly to protect your interests.Cheers,William