AU Gold is a surplus lines carrier meaning they take a lot of insurance risks that standard carriers (think state farm, allstate, progressive etc) won't take.It might honestly be your best shot and getting some kind of coverage placed.

He is beat HD, Lowe's and Surplus Warehouse. 

I am curious,  if this is a short term dip in real estate activity or is it because of surplus construction and homes in the area, that could result in long term rental stagnation and price cuts as well.Any guidance, tips are really appreciated. thanks and regardsvijay

1.Because theres only a few explanations as to why the borrower didn't just sell the property, paidoff the 1st and put the surplus in his pocket.

Back to the question; an auction sale to me does not 100% mean you will by default lose what's invested (could even maybe have a surplus situation), but assume I am wrong, and pull in a legal specialist.

There are a few surplus lines insurance agencies that do not require inspection. 

I would imagine all the markets that have a lot of hosts barely hanging on will push them into selling and creating a surplus of inventory and lower prices. 

Since I am carrying the note until the new owner is able to refinance, I am receiving an additional $500 per month in surplus cash flow.

In bid-up auctions there is a surplus of funds between what is owed to the taxing authority conducting the sale and the final sale price at the close of bidding.

The investor gets all of it to the point that it equals 8% on any unreturned capital and the rest drops to the next tier of the waterfall, which usually means that that surplus portion gets split with the managing partner in some way.To answer your question, preferred returns can be whatever number the investors and manager agree to, but the most common range is 8% to 10%, with 8% being most common in my experience.It is possible (and common) to have a 10% preferred return on a three year investment and a 0% cash-on-cash return for the entire hold period.