I will include my currently longest held rental (not the one I had before but sold though the rent appreciation is the same).Bought: about 150K 7 years ago at bottom of market.Cash flow at time: $50 a monthPrincipal payment at time: $230 a monthCurrent value: 330K (180K appreciation)Current cash flow: $1,000 a month after ALL expenses, reserves for vacancy, capex, etc....Current principal payment: $300 a monthSo in just 7 years rents increased enough that I went from making $50 a month cash flow to $1,000 a month cash flow. 

If you go this route, it may be a little hard with the children and mother-in law in the house.You factored in a lot of the costs such as property tax, interest and likely principal.

I'm not sure why your cousin thinks he's owed anything, I'm sure you gave him a good deal with the rent-mention that to him. 

@Nick Weston - A house hack may be a good play as housing is ordinarily a fixed expense with the IRS giving favorable treatment to the gain on the sale of one's principal residence, exempting that amount up to $250k if you are single and $500k if married provided you have owned the property for 2 years at the time of sale. 

Its a 1420sqft house 3/1, 2 blocks away from the school, with a complete "extra space" upstairs room that is neither a BR or living space due to no heat/air.. we owe 75000 on mortgage but the hosues recently sold in town (very few) are going for between $125/$145 a sqft.

Deduct that from the money you owe the contractor and see if you can get back in track that way.

And also to be fair, I also have no experience with owner financing so I only assume their original loan will still show up as owed since it would be "wrapped" around the owner financed one, yet still exist.I will definitely discuss this with my lender, first time using a HELOC and I'd rather be clear with all parties what I'm doing.

My California primary is worth $650-700k and I owe 335k meaning I've got a sizable amount to equity that I want to leverage to buy a 4plex somewhere in the US and start down this path of building up lots of cash flow and rental properties.

I still owe the bank on the note (conventional mortgage).

The opening bid at auction appears to be about 13K more than the mortgage holder is owed, so maybe they have a deal with him to help them get paid??