If this could be organized and educated into fact it would indeed be a viable way to cut the sharks out, and by golly, the working Joe on the street might actually be protected from financial devastation rather than be totally helpless as is the case now with the managed portfolio junk being pushed.

I am extremely new in this field, but I have a partner who has been pushing me extremely hard to go all in with him investing in a rental property in a retirement community.

I'll start with the Axios interview I gave back in December and was published in January  Case and point, the low skilled Agents will be pushed out as there is now less low hanging fruit out there for them.The Elite Agents who have been superior to the low skilled Agents in everyway except for the willingness to work for a low wage, will no longer have to compete with 1,000's of low skilled Agents offering their services for a much lower price than the Elite Agents.Fewer low wage Agents means all that money rolls right back up to Daddy.

Be ready to call the Police if they start a push and shove.

A problem is this would frequently push loans above appraised values. 

Some landlords may charge you the amortized cost each year, but some may try to push full expense on you this year.  

I would do vinegar based abatement, wash off then 3 coats of primer by Kilz, primer is just...primer.

I came across this article and it seems like there is a push for this and to make basement/cellar apartments legal but still hasn't happened.

Hey mate,Sorry to hear about your troubles but it's not too uncommon.I've been in the turnkey biz for 10+ years now and have often been called the "bad guy" as we only sell to investors looking to purchase with cash.Many believe that because we only accept cash buyers, that we inflate the properties price which definitely isn't accurate.Quite on the contrary when looking back I feel that we under sold them lolWe can justify every one of our property prices with a CMA independent of our in-house sales.Whoever believes that financing a turnkey property makes it safe is wrong.Most turnkey providers or affiliates push the financing model (Even in today's high interest environment) to make more sales.They have "in-house" lenders or community banks that they establish relationships with and promise large volumes in loans.This in return get's rewarded with various favors and many are easily able to manipulate appraisals.Having flipped over a thousand properties, I know how easily an appraisal can be manipulated so for anything reading, "NO", financing a turnkey property doesn't necessarily make you purchase it for fair market value.To answer your question:When S#%@ hit's the fan like it did for you with this deal, I personally would always look to cut my losses and move on smarter and more experienced.Granted, over the years I have witnessed many investors buy 1-2 properties from my company and expect miracles only to get disappointed. 

Maybe a higher PP pushes them past the pain of paining Uncle Sam.