DSCR qualifies borrowers with rental income rather than personal income, so you don't need tax returns.

Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable).

Conventional lending requires tax returns, good FICO and reasonable DTI. 

Especially if your son could then try to sell his primwry with the ADU under the sec 121 tax exemption I wonder if he could sell you the land?

Is taxes going to be higher today or higher in the future? 

@Bradley Buxton makes a very good point to make sure to do your due diligence as you won't be an owner occupant like your in-laws.Last bit of advice: Because this is a friendly deal, you want to take your time to make sure you structure it in a way that maximizes tax and cashflow benefits for both parties. 

They also like the tax benefits associated with ownership.I've taken both approaches and have benefited from each.

I am an agent and while you are partially correct - the majority of life insurance policies are structured for leaving the death benefit to the insured's beneficiaries.However, when a client asks for an 'infinite banking' policy, they are asking for a vehicle to accumulate cash that has tax advantages, moderate growth, liquidity and no exposure to market volatility.

I don't think it passed in either neighborhood, but lets you know where the sentiment is.There is no specific tax offset for new construction that I've ever heard of. 

As you alluded to, sometimes a passive note investment purchased for monthly payments “goes south”, and becomes an active participation investment, with plenty of additional capital required for legal fees, forced place insurance, and property taxes.