We have some liquid capitol, some other assets, and a good amount of equity in our Knoxville home.

If you were in my shoes with this amount of money what would you do or where would you start?

I’m trying to find if there is a way to lessen the amount of capital gains I pay.

Your loan amount will be based on the lower of the purchase price and appraised value. 

Now I get alerts whenever a new one comes on board, along with the rental amount.

Lenders might be willing to accept less than the full amount owed, especially if the property is underwater (i.e., the mortgage balance exceeds the property's market value).So, in short, you can pay off the mortgage even if it's technically still in the previous owner's name.

Also, in a mainstream asset class like value-added multifamily, I see no reason to take a risk on a sponsor that doesn't have full real estate cycle experience or that lost anything more than a small amount of money (and prefer no money lost).

@Theo Seng As Preston posted above, in general a FHA / conventional loan for 3-5% down and a fixed 30 year rate will be one of the best values for a buyer.I've purchased a number of deals using seller financing. 

Apprecaite it and that sounds like it could be a great option for some future purchases that need a decent amount of work. 

If anyone stays in past closing you hold a LARGE amount of money in escrow and charge 2x market rent.