However, if she is of sound-enough mind to sell you the house at such a low price but hasn't taken the normal step of putting it on the market, to avoid foreclosure, I'd be concerned like @Cara Lonsdale and @Bob B. have mentioned that someone would eventually recognize that and possible twist it into something else.  

Maybe with your explanation it's a bit of a twist they cannot then call the Note due.

Let's try to twist your mind a bit ... you have to pay tax on cash flow ... if instead of collecting cash flow as it trickles in, paying taxes on it, and then DRIPing it into index funds, etc. if you don't need the cash flow and do need the tax write off, what if you were to pull excess equity out via cash out refinance ... use that larger lump some to redeploy into another investment property or any other investment you choose.

But here's a twist you might not have considered."

Your tenant can twist an otherwise innocent statement into a big flaming lawsuit.Remember - de-escalation is your friend.

HERES THE TWIST.....they have been so faithful with paying because their current rent is $550 and the market I'm in ask for $780!

I don't want to twist numbers just to feel good, but in reality loose money.  

We're not talking big bucks here, especially if you can install yourself and buy gently used. 

He really wants to be like his brother, Guru George and like him, will defend bad advice as he perceives his business at risk if he doesn't stick to his opinions, regardless of how it may effect others.Then there is the Predatory Pete clan, investing is some twisted plan to grab any dollar they can without any concern for the ones they deal with or in advancing their position.

Two different twists on the 1031 exchange are the "consolidation" exchange where multiple properties are sold in order to purchase one larger property that satisfies the criteria.