This doesn't make much sense.

Whether it still makes sense will depend on how much you can defer vs. the basis.

You might suggest that once they get their money back, you split the first $100k (or whatever number makes sense in your deal) 25/75 where you get 25%, then anything over $100k, you split 50/50.  

I’d love to hear your thoughts on whether this approach makes sense or if there are other strategies you’d recommend to optimize profitability. 

Gotcha that makes a lot of sense. 

It makes sense in places where it has temperature extremes.

If so, youll want to do the calculations if it makes sense to immediately refinance or wait the year until the penalty goes away. 

Quote from @Mike Levene: Thanks @Scott Trench this makes a lot of sense.

This was my first deal, and house hacking made the most sense because it lowered the threshold for risk in my mind.

For me personally, I am hesitant to sell unless it really makes sense.