They’re currently paying way below market rent and are on a fixed income(social security).

The city's strong rental market driven by a growing population ensures a steady income stream and with affordability as well as a median home price below the national average, Cleveland stands out as an attractive option for those seeking a promising return.

Maybe they mean your net, net income? 

Could the rental income justify the price?

I offer them a lump sum and monthly income.  

I am starting from ground zero, with no prior background or capital to invest, but with a strong desire to create passive income for my family.I currently work as a middle school teacher in California, and while I love my profession, I have a strong desire to explore avenues that could potentially provide financial stability and additional income streams.

U want your parents to talk to their CPA FIRST.. if they go the development route they are now ( depending on the amount of units) creating inventory.. which will be taxed at ordinary income rates ( very HIGH)if they just sell they can 1031  and move on to something else.. many times when you run the math consider the risks of a partnership.. the sale of the land is far better than thinking your going to make some profit.. 

The investment costs would be $300-$400k, with a potential profit margin of 60-90%, and a gross income on rents.

It's to report all transactions/earning to the IRS.

If you're seeking a reliable income stream, consider checking out Cleveland OH.