She put a portion of the down payment (15K)...and of course there is a little equity...

To make a long story short, they are no longer able to make payments on the property and are in danger of losing it.I have a rental property in Southern California that I currently own whose value if I sell should cover the outstanding loan balance on the farm.

Is LBYM long enough for a full down payment really worse than the stress on your family? 

Preforeclosure owner finance wrap, paid off the default payments and taxes with cash and assumed the owners loan.

The claim was that you "skip" interest payments.

If cash flow means you make $8 more than your mortgage payment in month 4, awesome, you have $8 for that month.But.... if you factor in closing costs, make ready costs, leasing costs, repairs... it's typically years out until TRUE cash flow, with a value add or a turnkey (unless you absolutely knock it out of the park with a BRRRR and then somehow cash flow after the refi, which I guess is possible but very unlikely.)

I do not understand your remark as related to the DSCR loan.  2 ADUs are not allowed by f/f conventional financing but is not always enforced.Fortunately if you stay with the current tenant without a refi, by the time you pay principle it is likely the rent will have increased enough to absorb the increase mortgage payment. 

And of course, if your actual cash value is less than the current mortgage(s) on the property, all of the cash value payment will go to the lenders. 

When I tried to get it when my side of the family found out and tried ti take over reverser mortgage payments to bank because she had died it was to late so they sold the house to Hud and then other reverse mortgage companies but a relative still lives there so they can't kick them out.

I could come up with a down payment for an investment property in a different state easier than my home state at prices are pretty high in the 300-400 k just for townhomes.