Need to be an accredited investor as well.A bit surprised there isn’t more on BP about these guys, which I’d say does cause me a bit of pause.

I wouldn't worry about what will happen, cause something will at some point.

How can we prove that any damage is caused by this specific tenant, given multiple residents in the property?

SizeCracks wider than 5 millimeters (0.2 inches) are a cause for concern Cracks wider than 15 millimeters (0.6 inches) may indicate a serious problem Cracks wider than 25 millimeters (1 inch) could be a sign of structural damage Location Cracks above doors and windows, Cracks near the ends of walls, Cracks where walls and ceilings meet, and Cracks that allow daylight in.

And even if the tenants chooses to stay in your property for 2yrs, the damage they may cause will eat away all of your cash flow and leave you potentially upside down.

I think it would be awkward if you raise the rent after a year, might cause conflict between you two. 

And that something caused you to change that intent.But a 1031 exchange would allow you to sell this property and buy any other type of investment property anywhere in the US. 

My question again stems around using seller financing to allow them to receive a consistent monthly pay of X amount and delay/lower their tax bill in the short term instead of going through a lender to borrow 800k+ causing my mortgage to be significant part of our income roughly 40-50% of take home -  which we are approved for LOL.

Cause an appraisal will cap you then. 

Padsplit residents can cause problems with neighbors and other residents because many have substance abuse and/or criminal histories.