But it will come with not only elevated risk but unusual risk, some of which may be difficult to mitigate.

If you want to be the investor, there are definitely ways you can make good money and mitigate the risk.

To mitigate against this I raised my deposit requirements.

Another way to mitigate that is to bring in an experienced investor to partner with you on the deal to help secure the loan. 

I would focus on a few things the front end to mitigate the chances of this ever happening. 

However, the arrangement triggers some special risks for buyers and sellers, and it's wise to engage professional help to mitigate those and allow the process to run smoothly.A local Investor-Agent who has experience in seller financing deals can help shorten your learning curve and save you a lot of headaches as they tend to understand the process better.Good Luck!

That's an important first step as it will help mitigate your risks, and help you identify the best markets that meet your specific investment criteria.

However, the deductions mentioned earlier can help mitigate this.Consider Consulting a Tax Professional: Given the complexity of tax laws and the specific details of your situation, it's highly advisable to consult a tax professional or accountant.

But if you do a 1031 you'll mitigate all of your tax anyway. 

It's just the "game" that the adjuster works in a loss-mitigation, ie LIMIT what is written out, vs accuracy.