You minimize your risk of being over leveraged, and barely making ends meet with the rental income. 

Both moved in back in 1970s, so they are probably in their 70s of age now...Now, I understand that these tenants are "untouchable" in San Francisco, and your only hope is to wait until their pass (sorry to say that)..

I don't know how much your loans are but you will need dollar for dollar in income just to get back to zero starting point with installment loans, i.e. if your monthly income is $3k and your loans are $1k you're going to be starting from a point of $2k income before any other expenses.

I can look back and question my decision to go with him based on a number of warning signs, but we know some of the same people and our trusted friend referred him to us.

Check back in 1-2 years when syndications are dumping their MF here at a discount.  

You can then press one button to export all tax documents at the end of the year. 

I'm just recently getting back into it and working on expired listings.

Principal to be returned in full at the end of the three-year term. 

Maybe carry back a balloon for 5 years?

From there, back calculate an offer price you would be comfortable moving forward with in this current market.