What your deal would ultimately entail is a buyer who trusts you enough to give you $125k and trust you to pay it back while his property is encumbered by both your seller finance note and your original mortgage for $125k.

What you propose is different but in your original post this was not clear.with the additional info, I have seen similar comped with quads.  

Most sellers only care if you close so you can usually use another form of capital stack other than what is on the agreement, however, the seller can force you to use the originally agreed-upon payment method. 

Do you need license like you need to become a conventional loan broker aka originator (I happen to be one, licensed in NY and NJ).

Originally posted by @Gregory Mcgraw:Ok I wasnt sure if you did.  

An 8% protected preferred return or a 10-12% target return. 3) Our passive note platform (Swell.investments) has yield from 8-20%. these are loans we have already originated and are available right now and we are happy to keep vs. matchmaking or crowdfunding where you only get to invest if the marketplace collects enough investor dollars or the matchmaker has a deal ready to fund (what you call whole trust deed investing).

The original six month tenant I had extended the lease 9 times and stayed a total of 5 years, paying me about $15k over market rent annually.  

The calculation involves:Selling Price: $1,075,000Original Purchase Price: $355,000Depreciation Recapture: $105,300 (taxed at 25%)Capital Gains: Sale price minus original cost, minus depreciation, minus selling costs (~15-20% federal capital gains rate for their income bracket).State Taxes: Since the property is in California, state capital gains taxes will also apply.Given the multiple layers, I’d highly recommend your parents work with both a CPA experienced in real estate and a qualified intermediary for the 1031 if they choose that route.If you need recommendations for professionals in Illinois or California, feel free to ask!

At the very least, I would request a refund of the original application fee as the City made a mistake causing you to have to submit again.  

Originally posted by @Anthony Fontana:For those that do not feel comfortable enough with excel to build out a tool on your own, I would suggest starting by taking excel courses focused on dynamic real estate modeling.