The buyer of course believing he had purchased the house paid a visit to the tenant, who of course called me.  

When I tried to get it when my side of the family found out and tried tp take over reverse 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.

You can quickly see why looking at this graph - https://www.visualcapitalist.com/buying-vs-renting-house-in-...You can see how in 2015 the average mortgage was cheaper than the average rent, so it was easier to make the math work with light value add and just buying single family homes.

As of today, the house rents for $3,400 per month and my PITI is $2,500 per month.

Dont mean to change topics, but I have been considering investing in east stroudsburg in student housing.

Buying a new primary residence has nothing to do with the capital gains exclusion.It is when you go to sell the new house down the line you'll run into a problem.

This october the tenant left without warning and house went vacant.

Quote from @Vid Vin: Was the house really for 2000 dollars?

People have to remember that the seller finance space fills the gaps that the banks leave behind. 

This leaves a lot of room for interpretation and that is exactly the issue we are having at the moment.