What am I missing (besides in some instances you have a lower interest rate but do not get clean title to a property)?.

Your interest rates are low. 8.5% is around the "market rate" for owner finance buyers right now...30-yr, fully-amortizing2.

And also that rates are just going to continue to be an issue, so it's likely something to plan for in rent rates and/or overall investment costs. 

Thankfully we are commercial bank clients so our rates are as low as you can get in the market place for anyone who is not Lennar or DR horton or those types.

We're going to see insurance rates climb for quite a while.

How much below market value would a sale have to be for it to trigger a gift tax and if so what is the rate on that? 

Hosts can get involved by either donating a portion of rents from their payouts or they can offer housing at a discounted rate.

Building a rental portfolio that replaces your income takes years and a lot of effort, this is especially true in our high price high interest rate market.You need to have at least a 10 year vision when buying real estate.

It's effective interest is similar to Mezz-debt at current rates but a bit lower.   

Connect with lenders and brokers, see what rates are out there, underwrite the deal and see if it makes sense after debt service.