You can structure a price for them to pay now, or get an appraisal done at the time of balloon payment and they owe you a percentage.

The property appraisal valued it at $226,000.

Property 1: 4/3 LTRCurrent Value: $475kPurchase Price: $363kDown payment: $40k (30 year conventional)Interest Rate: 2.75%Remaining Balance: $294kMortgage payment: $2369AVG revenue: $2775Property 2: Duplex - 3/2 House Airbnb & Detached studio apt 12mo leaseCurrent Value: hopefully within $575k-$600kPurchase Price: $591k (appraised at $599k)Down payment: $30k (30 year FHA)Interest Rate: 6.125%Remaining Balance: $552kMortgage payment: $5041 (including $362 PIM)AVG monthly utilities: $385 (full year avg)AVG monthly revenue: $5261 (full year avg airbnb + $1650/month from apt)

Now I'm not an expert and have not had it inspected or appraised yet, so I could be wrong and it might need a complete tearoff.

@Cliff Durrettif it's residential it's going to be valued / appraised by sales comps, not by incomeis that what you're asking?

It would be worth seeing how much the in-law apt would add in terms of value since appraisers in different areas value them differently. 

Related to what @Rick Pozos indicated, you need to get a time of death (TOD) appraisal.  

My new appraisal was lower than expected.

Keep in mind that when I start doing BRRRR loan in Detroit in 2002 through 2006. these same houses that I was funding were appraising for 140 to 160k.. then they fell through the floor down to 10 20 30k now they are at 50 to 60 plus rehab.. still have not gotten back to 2004 levels ..

A strong valuation and even pre listing appraisal and/or inspection can sometimes be a worthwhile investment but not a necessity. 3-5% commission for what is effectively commercial property is common.