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.

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

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.

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? 

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.

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

You could consider it disposable but I am guess the costs to get it safe for habitation will really impact your decision.Regarding the house on stilts, if it is properly engineered it would be considered real property with a unique foundation.

The applicant with esa/support animals pays nothing to sign up and petscreening will verify that they are properly registered as such and that they are not trying to claim that they are and save money on potential extra pet fees/rent. 

:Class A Properties:Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Vacancy Est: Historically 10%, 5% the more recent norm.Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.Class B Properties:Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 yearsClass C Properties:Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation.