That could be a huge albatross around their neck, and may result in a massive loss in June of 2025. 

However, when I had the choice to go to $5,000, the savings were very minimal, and it would have taken 10+ years to recoup if there was ever a $5,000+ loss.

Private lending is passive but in terms of taxes "ordinary income" and you cannot cancel out with passive losses that you get when you are an equity holder of real estate. 

Would experienced investors stick it out or minimize losses by selling?

If you can get them to sit down and figure out the actual losses they will take on paper, maybe it will sink in.

Please take time to read the stories posted here and in the syndication thread of discontinued distributions, lack of updates, loss of principal, phony syndiators pleading guilty to Ponzi schemes, etc.

If you spend every dime earned each month, you will eventually find yourself in a bind when the roof needs to be replaced or a tenant trashes the property and leaves you with a $10,000 loss.

Exactly  expecting private note funds to put out into the public their loss's is not going to happen anytime soon..

Actual facts driven by factual numbers including potential realized loss.

However, take a look at your father's tax return and see how much PAL (Passive Activity Loss) may be built up.