The remaining 25% of the gross rent will be absorbed by vacancy losses and ongoing maintenance expenses.When using a lease agreement, the lease agreement amount must be supported byForm 1007 or Form 1025, as applicable, orevidence the terms of the lease have gone into effect.

My personal advice is cut your losses and move on. 

If you seriously want to clean this up and are willing to take a risk, I would absolutely switch things into my name and begin taking care of the property as my own...it takes up to 10 years, but if you'd be willing to start caring for the property and were able to at least rent as a break even, pay taxes etc, then it's no big loss if the owner came back and stopped your claim.

Investors buying 5% cap rate properties are most likely banking on rental increases while taking appreciation losses on their taxes as well as mortgage interest.  

The ones that are can clearly stomach the losses if that happens.

By splitting out the rental, voila, now you have rental losses which are automatically aggregated with all your other rental activities and are non-passive, even if you don't materially participate on it's own. 

We pay a shade over $5000 for a 2 ton

It is obviously better to have $1 in passive losses to offset taxable income today vs $1 in losses 25 years from now.If I have a $1 million dollar short term vacation rental , using cost seg I will be able to deduct 35% ( example number, not exact) or $350k this year.

But, with a little planning and thought and education you can help prevent a total unexpected loss, or minimize it.

Foreclosure usually happens because of death, illness, job loss or divorce and cripples the homeowner's ability to make mortgage payments.