I also want them to have coverage because if something really bad happened, like a major injury or death to a tenant, I imagine that their family would start suing everybody (owners, manager, contractor, etc.) and would go hardest after those who they think are most capable of generating a payout, i.e. the insured parties. 

His son will receive a "stepped up" basis on the valuation and can either then take over the rental income from there or sell the properties using the value on the day of death as the basis, thus generating very little capital gain.  

You can offset that with more properties generating $100-200 cashflow but it seems cyclical.

I am not saying this negatively just stating that one never knows when ,what , and how things have come back to me clear out of the blue from these type of relationships . last point : I am on the backside of 60 70 years old is closing faster than I want it to , Many in my generation GET IT !!!

However,  if I could generate some passive income and increase that over time,  I would be happy with that as well.  

Five units and above is considered commercial, which means that the income generated by the property being purchased is used to qualify for financing.

I would use the equity to purchase homes that would generate positive cash flow of course, but I am just looking for some general advice around the idea as a whole.  

Most of the Older Generations prefer MAX cash they getting at closing . 

I am looking for various ways to generate cash flow.  

We've also been running a few side businesses, but nothing that's generating substantial income.