I am not a credit expert.. just know how tough construction loans are .. so with zero experience and missed mortgage payments I suspect u will not find a lender that will do a loan for you. 

We did get negotiate money from them to help with roof repair, but now know they were not honest on their disclosure.Our inspector missed  code violations, HVAC issues, pipes that had been worked on and issues hidden that had occurred while sellers lived in the house, signs of drainage and water damage inside the house that had been painted over, completely blocked dryer vent...and we are finding more daily.We have had the house looked at by a structural engineer and HVAC techs  that has told us we need thousands (likely tens of thousands) of dollars worth of repairs to make this property able to rent and come up to code for rental.

Quote from @Stuart Udis: You are still missing the point. 

@Jack Mi: my first impression is anyone that is buying a deal at a 4.5% going-in cap rate with 7% interest rate is anything by conservative.Now, there are so many details missing that it is impossible to give any true thoughts.The things I like:No up front fees, so less motivation to simply transact10% Co-invest is pretty good80/20 (assuming there is no second hurdle) is fairly good.Things that give me pause, based on what is actually presented:Going-in cap rate is very slim.  

Have not yet spoke to local credit unions.This has all been validating to what I’ve been thinking about, but you also brought up a few real world examples that i would have missed. 

Maybe I am missing the big picture on this one but I’m not ready for several door properties which would be a higher and easy 1031.  

Additionally, you miss out on one of the biggest advantages of real estate: forcing appreciation through strategic renovations.Another issue with Turnkey properties is that they often aren’t homesteaded, which typically throws off any proforma, resulting in higher-than-expected property taxes.

so much private land has been logged and replanted since then.. in those days we would buy a 40 lets say for 150k  take 200k of timber off of it then sell the land on contract for same price then hypothicate the note to pull out more cash rinse repeat.. we also would use our logging roads and staging areas stratigically so when we left the roads were in the right place to do a 4 way lot split and the landings/stagging areas became the building pads.. in the NW permits for logging are not tough.. in those days it was over the counter and there was nothing you needed to do with regard to excavation.. however if I just bought the land and wanted to put in roads and pads then I would have had to get a grading permit and all the survey and engineering that went with it.. its was really something how we did that.. and I miss it to this day.. the other item that made it so profitable was Japan was paying premium for Export quality doug fir logs.. you could get double or more for export logs.

Why we don’t like ARR (Average Rate of Return)It’s easy to skew the numbers.Here's an example of a positive ARR of 12.5%, but the investment loss is $50.Year 1 Start Value: $100 End Value: $25 Annual Return: -75%Year 2 Start Value: $25 End Value: $50 Annual Return: 100% ARR = 12.5%Am I missing something here?

By not taking a partial disposition deduction, you would be missing out on potential tax benefits associated with recognizing the loss on the disposed roof component.