However, your realtor is right that you would be better off selling and using the primary residence exclusion so your sale could be tax free. 

Thanks for reading- very new to this and am looking for any clarity you might have.You have the opportunity to buy at foreclosure sale but, you will be in competition with other buyers, whereas now, you are exclusive with the sellers.

https://www.rentcafe.com/blog/apartmentliving/luxury-apartments/8-out-of-10-new-apartment-buildings-were-high-end-in-2017-trend-carries-on-into-2018/HIGH-END CONSTRUCTION BY CITY16 cities are getting exclusively high-end rentals in 2018Of the nation’s 30 largest cities, there are 6 urban areas were renters saw nothing but high-end apartments in 2017, while in the first part of 2018, there are 16 cities where all new apartments are top-grade.

The amount you owe has no impact on the gain.You are correct that you would be entitled to a $250,000 gain exclusion if you lived in the property for 2 out of the last 5 years(and you are not filing jointly).

But you can also gift back that rent using the annual exclusion.  

@Chris GuinnI do animal Friendly exclusively, those who have proven they cannot afford current rent (or are too careless to pay it on time) do not qualify for the increased rent (and responsibilities) of animal ownership.

Property in CA undergoes a reassessment for property tax purposes whenever there is a change in ownership, unless an exclusion applies. 

Be sure to check out the Sec 121 tax exclusion for the sale of your primary residence. 

@Danni CatambayI was thinking some sort of hybrid deal, like a few bucks on the front end and exclusive rights to list on the back end (I'll probably sell in a few years and redeploy the capital to something bigger and better). 

Assuming they've owned and occupied it for 2/5 years they get the 121 primary exclusion- By splitting it over multiple years they can potentially keep the capital gains in all years except that lump sum year to the 0% capital gain bracket.