Every little thing in the project should be in writing, even down to the door stops :-) See my tile spec sheet below ...Two problems with your post though - 1) In my experience, most problems come from the customer changing their minds constantly.

Trading off current cashflow for principal payoff in the future?

Since my adjusted basis is about 50K, am I going to have a $250K gain on my income taxes this year?

After two years of occupancy, qualifying for the tax exemption, and benefiting from appreciation, we chose to sell and reinvest the funds.

These logs regularly end up in the Tax Court and are usually destroyed upon review.

@Bradley Buxton makes a very good point to make sure to do your due diligence as you won't be an owner occupant like your in-laws.Last bit of advice: Because this is a friendly deal, you want to take your time to make sure you structure it in a way that maximizes tax and cashflow benefits for both parties. 

Things in your tax filing need to be really off to do this.Being a REP/active participant and using cost seg to offset a spouses (or your own if that's all you do) W-2 wages is fairly common practice.

 WE  do both  give me a call and I can explain but depends on where the tax advantage is

@Albert Johnson sounds great, but wholesalers will lock you into a contract with the hope of selling it off to someone else and pocket the difference. 

Hi Wendy,Coming from a Banker in most cases the Heloc is a Line of credit you only pay on the amount you use and a Heloan is the bank/lender gives you all cash.Lets say you borrow $10K as a heloc and in the first few months you take out $1500.00 your payment is only going to be based off the $1500 and not the $10K because the rest in the line of credit (LOC) not being used - Same as a credit card.