And your point about a lingering HM loan makes sense.

I would get an attorney or title company involved to create your loan documents to ensure they comply with the law and cover all the aspects you need.Another method that is likely your best bet to take on investors is to create a joint venture (JV).

You typically need up to two years of stable employment before a bank will loan to you.

Also, I am guessing that due to the state of the house, it would not qualify for a conventional loan?

Quote from @Brittany Minocchi: I'm a bit farther north, but I've helped a couple of people with loans in that area - the properties seem to be working out well for them!  

what if the seller has existing loans and liens?

I guess I dont understand what you asking.are you asking can a buyer cash out your equity and just take over your seller financed loan.

Depending on the loan amount for the new property, roughly a little over half of the gain could be deferred through the exchange.Without a 1031, they’ll face taxes on the entire gain, including federal capital gains tax (likely 15% based on their income), California state tax, and depreciation recapture, potentially totaling $130-150K.

Here’s the bottom line; unless the deal is VERY large, or the sponsor is going to syndicate a large number of deals, the investor will make more money purchasing the property theirselves with a option low to moderate interest rate loan.  

You have to do some more research.Are you saying 200k in cash so you could spread that out among multiple downpayments or 200k via a loan?