Sounds like a good plan - from a financing perspective, its a good idea to start researching now - for better or for worse, a lot of lenders view 1st time investors without a primary residence with a owner-occupied mortgage as a flag and might limit some options

It doesn't sound crazy, numbers look good, if you know you can make it work, why not?

But again, I'm here for advice and if that all sounds terrible, I want to know! 

Domicile: WA State (income tax free)Property location (Texas): (income tax free)LT gains + Depreciation recapture ~ $300k on a $500k income property ~effective / average tax rate = 12% for past umpteen yrs (relatively low income, avoiding IRMAA and doing Roth rolls (no 'realized' income, just transferring from tIRA to Roth = vast majority of annual MAGI income)In the end (coming soon, ~17 yrs) ALL remaining estate will go to charities / Charitable Foundation / DAF.

I am just beginning in real estate investing and this sounds like an awesome idea.

@Quiche LynnI think your confusing the term noteThe note is a promissory note - meaning the document that she signed stating she will pay this person this much money.What it sounds like is she wants to send a settlement offer to try and renegotiate the deal?

Simply relying on an average CPA or general advice from forums may not be as effective in helping you identify and take advantage of all the potential tax benefits available to you. 

And regardless of whatever claims a company makes regarding the ranking of phone numbers, it's 100% not accurate and they are just trying to make it sound better.    

You come off sounding really anal and you're probably going to pick at every little thing.Property is rented "as-is", "where-is" condition.

It sounds like you are placing into service as a rental a house that was previously a personal residence.Your basis is purchase price + improvements made to the house from purchase to the time it was converted into a rental.