It looks like there's an additional day of interest in their calculation which checks out just fine.

I'm in Iowa and while not KC, I think the factors are probably similar being in the Midwest. 

Additionally, do you have any other ideas or strategies that might help achieve his goals without incurring a tax liability?

In addition, they are bearing the risk of you backing out of the deal and them being stuck with vacant units not bringing in rent. 4.

If so that's a big additional risk for the buyer.

Here are a few ideas to explore that might help you get closer to homeownership in San Diego without selling:Cash-Out Refinance:Refinancing one or both of your El Centro properties could free up additional cash for a down payment without selling.

Man, just in 3 years if you have the tenant leave every time, even without the negative cashflow, that alone can cost you an additional 20 or 30k.

As JD said, the tenant must list the landlord as "additional interest" on the policy.

This is bad math, once most people factor in their income tax bracket. 

The market is always evolving and there may be good deals to be had near term or you may need to wait a while, depending on many factors like interest rates etc.