The problem is that your debt payments are going to basically wipe out that $400K profit unless there is room to increase revenue or reduce expenses.

So, what is happening today is not as important as what will happen in the foreseeable future.If rents are increasing faster than inflation (I use 5% per year as an average rate), then it may be worth holding the property, since your cash flow will increase as rents rise.However, in your post you stated, "Mortgage rates have kept increasing as well, that's why I put a range on negative cash flow."

Develop your negotiation skills so you can secure better pricing, seller financing, or terms that increase your bottom line.

This is the BEST $100 you will ever spend, and if you listen to Amanda Han's tax book, you'll know it's also likely a business expense for you to write off :) https://biggerpockets.supercast.com/My perfect way to learn from the BP books is to listen to the audio book through the subscription above, then books that really stand out to me I go old school and get the physical copy so that I can re-read it, take notes in the margins, and put post it notes so key points are easier for me to re-reference in the future.

You’ll lose any property tax caps they may have enjoyed and be increased to the non-owner occupant tax. 

Quote from @Don Bessette: First, you need to realize this is a business relationship.

Is the way these lenders do business?

Cash flow decreasing on Class A because I don't do large rent increases on my great tenant (maybe slightly under market rent) and large property tax increases. 

In contrast, mid-term rentals are primarily driven by business necessity.

It sounds like a single family house where you will be living in the house(personal use).Therefore, you may not be getting the tax benefits you think you are.Consult an accountant.I am not sure why your sister would agree to this as well, she is losing $170,000 in this transaction and she faces the possibility of you increasing her rent.You also have to charge market rent or close to market rent or it is all deemed personal use.