Selling at FMV avoids the gift tax but provides your child with a higher tax basis, reducing their future capital gains liability.A better strategy for selling below FMV is to sell the house at FMV on an installment note, then forgive interest and principal annually up to the gift tax exclusion amount.

A great thing about my team is we handle the sale and property management side for investors!

Could seller finance (not recommended) to reduce initial burden and spread it out over time

@Shawn Questa I agree with you that there could be some opportunity here, but personally, with that little equity in the property, I'd wait for the pre-foreclosure process to start and  perhaps you can do a short sale (though I don't know the details on how that's handled in TX).

Managing from out of state could be tricky, especially if you have a turn, making sure the property is ready to be marketed, doing showings, screening applicants, and then handling any maintenance/repairs. 

I don't know of any title agency that would handle a closing like that since you wouldn't know the amount of funds needed to bring to the table until the minute you do the signatures....but maybe you can find one. 

Even if you handle management yourself, budget at least 10% for property management costs so you’re already prepared to scale.

I am not an accountant or tax professional so I would recommend talking to your account about what that means and maybe some strategies on how to reduce your tax liability

So they often will reduce the leverage of the loan (getting 65% instead of 75%) or deny it (which isn't as likely). 

2.Are there strategies to reduce the required down payment or secure better mortgage terms?