We will sell some of the lessor houses in the future and pay off some others.  

BONUS TIP: I just read on a listing that I'm going to adapt: Include in tenants lease they must pay for PSE&G Worry Free service.

You would pay tax on 2/5ths of the gain. 

My understanding is that we'd pay $1,000 for a rent appraisal which would have to come in with a ratio of at least 1.0 (i.e. at least as much rent as PITI) for the loan to be approved.My concern is that 730sf is basement, and only 300sf of that is fully finished. the rest is just walls.

The buyer will agree to pay some monthly amount higher than the market rent, to offset the cost of the property when the purchase happens.

I did pay the mortgage.

@Carlo D.Paperstac@Brett Burky did not even have to pay me to say this

Present it to them as a return on their money deal - “I’ll pay you 8% on your money while I’m borrowing it”  or whatever, and  pay them out of the cash flow on the deal until you can qualify for a refi into your name when you would pay them off.  

I'd also add, you need to be sure they can pay and have some savings put away.

Never, Never use your sellers property tax expenses to estimate your future property tax, this is a big mistake done my many people in the industry.If you haven’t sell your Main home where you are living yet you might consider to keep it, because your new home would be triple the amount your are paying right now.