Think about all the "what ifs" that could go right or wrong, and figure out how you want the business legally structured. 

Most HOAs are required to get a professional financial audit and file a tax return each year and then there may be legal fees to collect back dues from people who aren't paying.There is a LOT that goes on behind the scenes in an HOA. 

Depends on when you get legal possession, or title, in that state.

Having a down payment money is great but what is your credit like and what is your mortgage payment ability, what is your debt to income ratio?

If I'm reading your pro-forma correctly your debt payment plus expenses comes to $685 only leaving you $65 per month net. 

At asking price and at current rents its cash flowing even with debt service. 

If so, you are not legally allowed to keep his deposit for rent if his lease has expired. 

They want to take over the full mortgage payments to help free the parents from debt and also keep the parents as tenants to come and go as they wish.

If you want the word docs, we can provide those too but need to make sure you understand that any material changes should be done only under supervision of an attorney, and that adding clauses does not make them legal or enforceable.

The downside for them is that they won't start getting any payments until you do, and there is more risk involved for them since equity holders get paid after debt holders in a liquidation.