If you buy a very large (many bedroom house) the rent by the room also will cashflow.

Investment Info:Small multi-family (2-4 units) buy & hold investment.

As a CFA you probably know the old quote from Warren Buffett who said something like "buy what you know and understand". 

Some knucklehead watched a YouTube video, where they "teach you to be rich by buying businesses with 100% seller financing." 

BUT that $170,000 would give us the potential to buy a few more long-term multi-families.I'm absolutely positive that there are things I'm not considering, but any help, opinions, and considerations would be appreciated!

You are 18, you shouldn't be ready to buy a property yet.

To make it simple…the investor is trying to buy your property Sub2 and needs you to refinance it into a long-term loan First.The investor does not have to ask the bank’s permission.

You could buy 5+ cash-flowing houses and let a professional PM handle the load.

Although I have a high income my assets are not immense and the insurance is protection against future earnings/STR  I will probably buy a primary home in next 5 years but happy for now where I am.  

Probably better to post in the Buying & Selling Real Estate Forum.Without details, hard to answer the question.