If you want to walk out with maximum possible cash-1) You parents should sell the house. 2) After they sell it, they can just gift you the money that you guys agreed upon.

Thanks in advance~We bought our first rental condo in full last year using our savings and a family gift (yes, fortunate us).

I spoke with an agent who mentioned that they'd heard of investors transferring the ownership into an LLC and issuing a small amount of stock and gifting it to the tenant, such that they are legally part owners, has anyone seen this done successfully?

As a former out of state investor (Properties gifted via my father's Estate), I can tell you that you are 100% on the money @Amy Hu.

The down payment was a gift from a family member and we purchased it using our LLC.

(Also do not fund a Roth this year, and ask a friend or relative for "gift money" now.)Buy a house for less than $275,000!

Later on, with her estate planning, she gifted over her portion.

@Brad De VriesSome considerations:1) If you are planning to use a conventional lender, your parents would have to "gift" the down payment to you as you cannot borrow the down payment (it's your "skin-in-the-game").2) Capital Gains tax is a federal mechanism.  

There are limits on gifts each year, so you don't want to get hit with a big tax bill for doing it the wrong way.

It is clear that you cannot accept gift for buying investment properties.