Personally, I've done very well house hacking single families in class A neighborhoods, but then again I arranged things conservatively so that I always have the means and will to hold through the rough times as well as multiple exit strategies in place in case plan A didn't work out.

The tenant is not proactively arranging a payment plan, and I have not approached the subject since in LA County the tenants have until Feb. 2023 to pay back rent.

I'm wondering if anyone here has experience with this type of arrangement or can provide insights on how it could work in my case.Specifically, I have a few questions:Lets say they owe $40k left at 3% would I just pick up this loan?

We typically get a tenant at market rate in a 1 hour open house or prior to current tenant exiting by showing the unit while occupied (vacancy is typically less than 3.5%).For a unit with a tenant that has taken good care of the unit (this one is in good shape), we usually try to arrange showings while still occupied by the current tenant. 

What documents or legal processes are involved in a seller financing arrangement?

@Veronika Pachunuri, their arrangement for how much each pays is between them as roommates.

Using the Navy Federal mortgage program, you could look for a single family home with an in-law arrangement and private entrance.

That was our first time hearing about such an arrangement from a local service provider. 

Thats not impossible, but can be tricky to arrange.

This could be an arrangement that's beneficial for all parties.