What I am really trying to get at is, how can I help my parents capitalize on this $500k of equity and also in return set up a property (residence/investment) for myself to have full rights to? 

Management should get off their sorry rear ends now and begin the process of attempting to find a replacement tenant with the hoped for goal of a new lease starting in January 1st, 2018.If a new tenant is found sooner (and a lease is started on, say December 10th) and there is no damage above normal wear and tear to the rental unit then management would need to return the difference in rent back to the original (now departed) tenant (minus any expenses for advertising the unit to get it re-rented).The entire point is that it is totally untrue that the rental unit has to remain empty for the remainder of the lease while property management sits around doing nothing.Gail

That's because underwriting standards only take 75% of the income into account and presumably your tax returns are showing deductions.

They're really not for me or probably most Real Estate investors on BP obtaining higher returns than what they can offer, but I do admire the hands off approach system they devised.

See what type of cash on cash returns you could get.

You would still be responsible for closing costs.If there is still a loan on the property - you may be subject to the due on sale clause.You may be required to file a gift tax return upon gifting the property to your mom.

For example, I loan 50k and after 3 months I get back 58.5k in return (50k loan, 5 points = 2500 and 12% interest = 6000).  

California will ALWAYS tell you that they get to collect taxes (it is there go-to answer, regardless of the question) and while she'll owe California income taxes, she does not owe any California employment taxes.However, at year end, she will have to file both California and Florida state income tax returns and her personal 1040 will then have to report to California since California has nexus to her business.I guess my first question is, since you are domiciled in Florida, why did you open the business in California. 

I'll be looking for cash flow of at least $300 (50% rule being at least $150) and cash on cash return of 14%.

This was proven to me in an ethics poll about returning an envelope full of money.