Depending on your amount you may want to consider a debt fund too as its less work and your money is deployed/paying you interest so you do not have to keep finding deal after deal. just some food for thought

If they want to sell and get their money back they’re out $75k plus real losses. 

After you qualify for REPS, old losses remain locked.

Once and if you get a judgment, you will still have to perfect it by collecting on it.Based on the information you provided about the contractor’s financial condition, collection seems unlikely.Sometimes it is best to take a loss and gain by the lessons it brings.

We met all non-passive requirements and can provide proof to show that our projected annual materially-active involvement is at least 500 for 2023.We met with our CPA and he brought to our attention that we had a loss of -$107k.

For example, you see it appreciating well and you sell it for a profit to make up for the losses?

@Kyle FronckowiakWeight the vacancy loss of raising the rent 800 per month with the time it would take to get a new equally as good tenant. 

It's net income is a loss due to high turnover costs, management fees, etc. 

If its low can do upto a 25% loss on monthly rent at 25% down payment and its a greater loss than 25% a month then it would be 30% down but will still close . no income no doc 

Quote from @Kevin Zheng: Hire an attorney immediately and get them out.The tenant can tell your parents are at a loss of how to proceed, so the tenant is taking advantage of that weakness.