If I can park the 388k ($415-27k) for one year at CD rate of 4.5% and then est 300k (after paying cap gain/depr recap) at 3.0% (assume CD rates lower) that interest income of about 24 months net of ordinary income tax is about the same as my current mortgage.Trying to play devil's advocate and think why selling this year does not make sense. 

Are you looking for steady, low-risk passive income now, or are you comfortable taking on more leverage to scale faster?

You can Host Finacial revenue tool to get an average of the income.

Are you able to request their balance sheet / income statement?

One consideration as you are working on locating private lenders, is that IRA, 401(k), and other retirement accounts can be used in many cases to make private money loans.

The second seller gets payments on a new note worth $1.35 million.You the buyer received the taxable income event from the sale of the first property.

Long story short, you spend a month cleaning and renovating, then you find a new tenant after just 15 days.In total, you lost three months of rent income ($3,000) plus paying utilities ($500).

This aligns with my interest in passive income.

In your case, changing the property from a rental to your primary residence constitutes a change in use.The depreciation recapture will be calculated based on the fair market value of the building at the time of conversion, not including the land value.Since you're tearing down the existing structure, the entire amount of depreciation taken over the past two years will likely be recaptured, as the building's value at conversion will effectively be zero.The recaptured amount will be taxed as ordinary income, up to a maximum rate of 25% for residential rental property (Section 1250 property).

Given your financial constraints and the property's ineligibility for historic tax credits, this approach allows for reinvestment into assets more aligned with retirement account rules.For future real estate investments, you don't need an LLC for tax reasons.