Generally, you will lose the EM if you do not perform per the contract.

I purchased a quad, a few duplexes, a 14 unit building, and a 10 unit building all with hard money and then later refinanced into bank loans or sold them as performing assets to other investors.  

We charge just a flat fee and I'll help you fully underwrite the income, credit, debt, ability to repay, so that you have a high probability for a performing note.

If not you could sell the note as non performing but would likely only get 5-10c on the dollar depending.Your mom also could  sell the property that she wants to your sister to live in and your sister, assuming she has good credit, could do a 203k loan to rehab the property.  

I sold a turn key near Irvington and it's been a good performer.

If you're going to be able to put it to work performing better than it is now, then I'd consider selling.  

I know all about taking a poor performing rental and turning it a great performer through rehab.

HI Jonathan,Since conventional owner occupied on a duplex will require 15% down min and 25% down on triplex to fourplex you would be limited to FHA financing in most cases.3.5% down payment on 250k is 8750 which should be sufficient given the amount you mentioned you have above (25k).Yes you can use the rental income.The appraiser will need to perform a rental survey on the gross rental rates in the area.

In particular look for ones that are professionally managed but performing poorly.  

If you are looking for passive income, validate to pay history and perform enough due diligence you are comfortable payments will continue.I use an old school HP12C to calculate yields and cash flow.