While talking about risk management may this will help: LOW severity, Low frequency - Retain the risk ( eg car dents) LOW severity, high frequency-  Reduce the risk ( eg common colds) HIGH severity, low frequency - Transfer/Share via insurance(car accidents, health problems- cancer, personal/business liability) - So this is the most imp part of risk management.

If they're at $1,200 and the market is between $3-3,500 there is zero chance you're going to able to increase their rent anywhere remotely close to that and retain them. 

However, I see this almost as a pension or annuity for investors because after all capital is returned through a refinance, the investors still retain the same ownership so at this point, the investors have an infinite cash on cash return until we sell, which hopefully is not for a long time.

I had one guy who tried to borrow money from me do this to about 20 plus people and the state put him in federal prison.. it happens.So there is a down side to this and the down side is to the seller not the buyer.. therefore sellers need to be careful and retain an attorney to walk them through the risks that they take allowing a loan to remain in their name and title to transfer.. that's the point.of course us buyers we don't care just like you mention it don't work walk away you don't owe the debt personally.. that's just not the moral or ethical compass I would follow.. 

It's like developing your muscles. 

Additionally, how long is their contract for, i.e. are you buying the place with a commitment that they will be retained as the property manager for a certain amount of time? 

She will retain the benefit of the mortgage deduction.  2,)  Second for a purchase contract for a future date (or when a mortgage balance amount is reached?

Exploring 203k loans for that purpose...I want to retain as much capital as possible to take advantage of any significant market downturns, at which point I plan to much more aggressively rinse and repeat multifamily hacks, and/or jump into some SFR flips or perhaps even some BRRR strategy buys. 

"...we are never left with nothing as long as we retain the freedom to choose how we will respond." 

I mean you are risking if an all cash deal $3M and you retained in cash flow $2.4M in 10 years.. your only out of pocket $600k but you own the building/land assuming it is a fee simple transaction..Also consider a plan B exit strategy if the tenant leaves.