Survey of mortgage terms (click to enlarge):From left to right, 1.25 points, 1.5 points, 1 point but $41k in fees.Prepayment penalty: 5 years declining, none, 2 year lockout followed by 10 years defeasance.Commentary/review/discussion: I tried to provide three very different options here, but all still real ways that people actually acquire such assets.

How long it takes to be financially ready is different for everyone.

I wonder if maybe it's a cultural difference? 

Dividing the bill by square footage is an interesting approach, but given that they occupy 1/3 of the home I don't think it will make a difference.

It's completely different than a LTR.  

Every property have another story but it looks like there is not a lot if different between both of them.

I was told that Farmers isn't insuring CA rental properties anymore, but if you have different info, would be interested to hear!

From the protection standpoint, there is no difference.

In the case where the Seller still had an outstanding mortgage, this would NOT be called traditional "Seller-Financed" (rather Subject-to) and has way different contracts and definite risks involved, such as you mentioned.. and others like the due on sale clause which accelerates the full mortgage due if the original lender finds out the house was sold to another end buyer without them getting their mortgage paid off first. 

I will spec materials/colors/repair method when I feel it needs to be done a certain way or I want something different/special.