This property came to our attention through local market research and connections.

What does he consider a substantial down payment and does he know that he has to pay capital gains on that down payment instead of just on the payments?

I’ve gained access to the basement and didn’t detect any foundation issues.

When I die, they can keep renting out the properties or move into the SFH, or take the step up basis and sell it with not as high of a capital gains tax hit (I hope they wouldn't choose the 3rd option).

I'm eager to gain hands-on experience and mentorship in this field.

Land doesn’t depreciate, and while buildings require maintenance, they usually gain value as markets grow, demand increases, and inflation takes its toll.Real estate investors benefit from a significant tax write-off based on the concept that properties lose value over time, even as their market value skyrockets.

I want to gain Capitol under my business name.

Even then, if you've built up enough carry-forward losses, a nice capital gain may not trigger any taxes to be paid. 

I believe you were right he would inherit your cost basis, so he would owe capital gains.

From this CT information, it looks like it is an offset against your capital gains from other property, so you would have to find investors with significant capital gains and/or have them yourself.