An easier potential solution is to execute a Ladybird Deed (aka Enhanced Life Estate Deed).

But with these numbers even living a minimalist lifestyle, saving enough money for a 20% down payment on a fixer upper at $300,000 is quite the stretch.

That in the right hands could take a individual to high wealth in the shortest period of time based on maintaining a extremely frugal life style for X years.

This has actually helped us sustain a frugal yet normal lifestyle where we travel, pay for daycare and have been able to increase our student loan payments on average by $1000/mo.

If you're trying to "increase their passive income" thinking that will give them the added cash flow now, and one day you can take advantage of that passive income I'd think long and hard about what they'd be sacrificing in order to achieve that end and the differences in their possible lifestyle in one situation vs the other.  

We enhance our aged corps AAA bonds and securities to give our lenders a greater sense of comfort and leverage, which gets you approval amounts that are 3-4 times greater than anywhere elseOur proprietary program is unparalleled to any other program currently being offered.

It is a life style decision not a investment but if it were me I would be looking for a nice 3 bed to rent.

If your goal is to be able to use the cashflow to improve your lifestyle in the near term then I would focus on what will do that the quickest as your initial goal and get to a place where you can be comfortable with the combined income from your job and a portion of the cashflow from real estate.

To open up my options, I have an idea to buy a SFH in the East Bay, perhaps with an in law unit or the potential to expand/ build/ convert an in law unit to rent out, while I live in the main part of the house.It would be great to hear any opinions or advice on this strategy.Another idea is to house hack and rent out the other rooms in your SFH if that matches your current lifestyle.

@Tom Ott  the old rust belt cities have such huge swaths of demographic shifts with erosions of values to the point the homes cost 1/4 of what they would cost to rebuild .. these areas have turned into the land of the turn key operator or landlord rental area.. and as such the values are more commercial in nature IE they will never really move unless rents move... as long as rents are stable ( which in my 20 years of working in those markets they have)  Investors just back into what they will pay for a given cash flow.. the property is just a vessel if you will.. since there are more homes than butts to put into them in many of these areas.. like Detroit you could bull doze 30k homes and still have left over housing for the population.Down town resurgence is happening in virtually every big city as the millinial buyer and older folks as well are tired of commuting and want a different life style.. and developers are filling that niche.I know in Portlandia its very true.