What is Estimated Principal Reduction and why is it added to my total return before taxes? 

Also, maybe by coincidence, but probably not, FINRA is the body that oversees the Registered Representative and Principal exams (Series 7, 24, 63,65)Given those facts two things jump out at me 1) any newly accredited investors will have a heavy finance, securities, trading background and will prove their knowledge through some sort of exam/certification/license that has nothing to do with being accredited, ie.

Just found out today the owner does this himself right now...So basically $50 in the hole each month other than $500 a month principal pay down.

You can always pay more monthly towards principal on a 30 year loan, but you cannot pay less on a higher 15 year mortgage.  

If I've been saving to re-invest and after paying down the principal still have enough to cover maintenance, vacancy, etc. over the next year, this strategy should allow me keep more money than using that chunk to buy tax-liens at 12% locally, then of course need to pay taxes on my gains. ($3,346.07x.12=401.52, 401.52x.78=313.19)To dig a little deeper.. here is another question for you. 

Most of the payments at this point are toward principal.

We are still trying to collect half the principal back from him.

You can essentially "Save" rent you would pay anywhere else, and instead get money (in form of principal repayment) from the tenant. few other thing you need to consider though is vacancy rate, property tax, capital expenditures, and if you would need to use property management firms (unless you have the time to find new tenants, deal with their complaints, etc.). 

I am a big believer in being patient on the buy - aggressive on the paydowns as my tenants pay me monthly cash flow in the present and monthly principal reductions for the future.

Out of the the 3 loans below, which would make the most financial sense to pay more towards principal?