K-1 losses, generated through depreciation and cost segregation, can often offset distributions during the hold period, minimizing taxable income.

I've heard there can be challenges with inspections and paperwork delays, so I want to get a better sense of what to expect and how to navigate those potential hurdles.

This in turn could turn away buyers/delay possession to a buyer who wants the home delivered vacant. 

You need to understand that given your situation the asset and operational impact must be absolute minimal, lowest risk exposure possible.

Overall, my primary goal is to create the opportunity to get into another home at minimal cost while keeping my parents in the current home, so I'm leaning toward transferring/selling the current property to them.

And now they are asking for a capital call or delayed distribution.  

It will be delivered vacant, unfortunately I missed the clause in the contract where it says the sellers can live in the property for up to a week after closing so there will be a bit of an unexpected delay there.  

Likewise, I’d need to work out how prospects would tour properties safely, legally, and at minimal expense.

All this is doing is delaying the process by a month and it'll become law.

The concept discussed likely assumes that you’re building equity through appreciation or loan pay-down, while any cash flow is minimal or neutral.