Thank you Ned, that is exactly right, we actually check a condo/townhouse about 2 weeks ago, the thing was a condo with a basement, I cannot tell if it was a condo or townhome, anyway, the ceiling in the first floor was bowing, the 2nd floor, one of the bedroom was sinking, could not tell how this damage was done but the walls came apart from the floor, you could see the roof of the unit bowing inwards towards the structure a bit, and their "general contractor" estimate that for 5k they could straighten the property and level everything, even 1 window and 1 door looked so uneven that you would think  there was something wrong with your eyes...5k for structural damage, good luck with that one, we ran as far as we could from that....but we have seen they do inflate their ARV, since we learned the hard way , we go through these deals with a magnifying glass, I knew I was not so picky, numbers do not lie.Another thing that caught my attention, which I do not know if I am overly suspicious now that I am older, but they want to get the closing for us at the same time/day they are getting the property from whoever they buying it, which it seems to me they try to save on the closing by having a "dual" closing when in reality is just 1 closing and we are the one paying for it...I do not know there are few things that do not click right with this folks.

It is based on estimates. 

Think of it like a Zillow estimate.

Furthermore, I compare their costs with the averages we have on such buildings and standard estimates to make sure they are in line.

How accurate are those estimates ?

This can be a little tricky to calculate when capital is returned throughout the project, and it is expected that a little capital will be returned at approximately the six-month mark, but for this deal it is pretty close to just the compounding annual return.4) What are the risks?

Once the rental home is sold, my half of the proceeds will be roughly $113,000 (this is after closing costs and taxes and is an estimation based on the current market value). 

The house would be considered a capital asset, so to be conservative, I would estimate 20% of the gain for tax, plus an additional 3.8% for the net investment income tax if your total adjusted gross income (worldwide) is over 250k.

Making some assumptions on this quadplex it would finance approximately $3000 per month including insurance and taxes.

If using realistic expense estimates (such as the50% rule), this negative equity can take years to recover.