>>For purposes of taxes, consult with a CPA to confirm this would work for your situation, but you could have the LLC be treated as a "disregarded entity" and thus, even if you and your wife are members, any profits/losses would "disregard" the LLC and go directly on your personal returns. 

Learn the eviction procedure for your area, perhaps contact a lawyer in the field to help you with this one, and get the fraudster you're currently housing out on the sidewalk to sleep in a cardboard box where they belong.You're going to lose plenty of money here, but this will never happen to you again, and you can minimize your losses if you move as quickly as possible.

You’re going to be personally sued no matter the cause of the loss.

Can you take the loss without completely ruining your finances?

Loss of rental income is only covered if it is listed in your policy.  

I think the development of the place is in the vision of the leaders.

i can only see it if you were upside down on an already owned property and you had to move and rented it to negate some of your loss

And unlike the borrowers, who fund the whole damn thing, the investors are covered for losses.

I have been with a property management company for 2-3 years in Arizona and the property is being run continuously at a loss.

Thanks to this equity growth, we were able to recover much of our initial cashflow loss.