Breakdown:Sale date: 4/4/2018 Under contract (as the Seller): $65,000Closing Cost 7%: $4,500Net income at sale: $60,450 ROI: 31%Annualized ROI: 37%Total Profit: $14,771 The reason this made sense was the ability we had to use multiple strategies.

I cannot make sense of your entire paragraph with the numbers in it.

I am originally from the Monterey Bay, but currently reside in the South Bay Los Angeles/ Long Beach area.I was raised “on the fence”, in the sense that I was exposed to much prosperity and poverty growing up.

- I think this is a better option than self financing with him at a lower value with added interest to get him to his price just due to time constraints on mortgage term plus the numbers seem to make more sense based on the passive income captured through a good lease deal.- How do I avoid him from selling while under lease?

I hope that make sense. 

Makes sense if you want to be an owner occupant, but not for an investor.So, maybe the auction sites work for some, but personally I'd rather use other methods to find properties.

Generally a HELOC can get you a down payment for the property, but generally not a whole property, it would probably make more sense to get the financing for any rental traditionally as it will probably have more favorable terms. 

I understand that in today's market the seller has very little incentive to accept the offer, but on the off-chance they do, I want the deal to make sense for both of us. 

So that is a bit of a red flag to me, but the numbers still make sense as long as nothing major is wrong.

She can't give any formal ruling obviously, but speaking from her perspective as the person on the IRS side of this, she said putting on Part 1 Schedule E and dividing it in half for each party makes sense to her and she wouldn't give a second look to this not having a 1065.