However, it must not have been your or their intention to avoid tax. 

While that kind of income is not a deterring factor, when I looked over the terms of service many big red flags came up.

And it can work really well for you as long as you pay attention to the statute requirements.In order to defer all tax you are selling investment real estate and buying investment real estate of at least the same value you sold. 

They are exceedingly rare, thus very expensive, but I believe they represent an excellent long term steady income and store of value.  

House-hacking with a multi-family property is a fantastic way to get started—it’s one of the best strategies for learning the ropes of property management while generating income right from the start.

I agree with the others here that say you need to have some skin in the game, if you are going to live there yourself, get an FHA loan rather than owner financing, you can get a 3.5% down loan, personally I do not love these as they require  PMI which is an additional expense, and you also need  bring additional funds for closing at least for taxes, title, attorney and transfer fees . borrowing from anyone else for the down payment, to include a personal loan from the bank is not a good idea, those again will be higher int. rate.

If there aren't any massive physical problems with the property, it appears you can grow income and equity.You might be able to buy this with little cash out of pocket if the seller owns it free and clear and was willing to finance nearly all of it.  

Now this is an annual thing (for all new properties).For rough math, you can generate a tax write off about 15-20% of the real estate value: one a million you can expect a $150k to 200k write-offs.

How does this look from a tax perspective.

At $400/month/cabin, our total annual assessment income is $48,000.