@Noah SchulzThe previous owners' failure to disclose a back-paying arrangement complicates the situation, potentially leading to tenant disputes or security deposit concerns.

Your conservative approach to estimating income provides a solid buffer, and the strategic location adds a layer of security.

Cons are the liquidity event that your parents will have to do to purchase the home (I assume the funds are in some sort of investment today so there's likely some tax ramifications on cashing those securities).

Instead of increasing rent, I would look at having the security deposit increased to protect against wear and tear.

I have several questions - imagine being able to split up property ownership into tiny pieces or having every transaction out there for everyone to see, all secure and tamper-proof.

There’s no specific IRS rule against refinancing a cash purchase and deducting the interest, as long as the property is used for investment purposes and the loan is secured by it.

My biggest hurdle has been securing financing to work on multiple projects simultaneously.  

With really bad credit I do require (in addition to first month and security deposit) 1/2 to a full last month's rent and/or a good honestrenter.com score.

Combining these strategies often gives investors the best balance of cost, simplicity, and security.

You would choose the tenant so you would have a decent amount of security on who is living there.