@Gavin Jex seems like they are trying to help you out, but exposing you to tax issues.As @Chris Seveney already pointed out, one of you will be taxed on the 0% interest loan as a "gift".The other issue is that you will get the property at $170k roughly, and then be exposed to capital gains of the difference between that amount and the market value.Highly recommend you speak with an Estate Planner for possible better options.

Most areas are seller-friendly now so even if you can't make it assumable, what's the issue with a traditional sale?

The process was straightforward, rates and terms were flexible, and I completed my home renovations without any issues

Texas is notorious for foundation issues so pay attention to that. 

Usually the northern portion of the country has this issue.   

Pre-screening can lessen the number of unqualified applicants and lessen this issue, but when a landlord decides their process they usually choose whether to pre-screen or not based on their own needs and saving their own time and effort not for the benefit of the tenant/applicant.

Is this a commonly successful approach given the local real estate and rental market dynamics?

Well right now there is a Huge issue with LAND to expand to and these issues are being worked on at the state level.

Technically everyone was a stranger before they moved in and we've never had any issues of stealing or squatting or any type of damage to the property.

Hi Aryan,You might want to find a different place to live (where this is not an issue).I'm not saying right or wrong here, I'm just considering the PITA factor of it.https://www.apartments.com/provo-ut/?