@Lincoln Waite Here is a great example of over complicating things into a net loss. 

I did one house I may end up taking a small loss on, we'll see.

If indeed a loss is taken on this which it sounds like is a fair possibility then if the agent was representing you the agents E and O will/could kick in and that's where you might get some financial relief.

Conversation is no different, motivation is definitely there, but telling someone, face to face, for this deal to make sense; 1 they over paid for the property, 2 they are gonna have to take a 40k loss in less than 12 months.

As the investor gains experience, they are not only able to more successfully foresee the “bumps” along the way, able to handle recessions, temporary negative cash flow, unforeseen capital expenditures without panicking, but will also recognize the opportunities necessary to turn a loss into a break even.

The money partner leaves $10,000 in the account for any incidentals and we split the profits or the losses 50/50 until we sell in within the next 3 years.

It's very easy to make one tiny, minor assumption to fill in an unknown that completely changes the context and consequently the answer - I've caught myself doing this a few times.As far as the legal responsibility for the debt goes with Subject To, my guess would be that the contract basically provides a pathway for the seller to pursue the buyer for recourse related to losses they suffer from the default of the original loan, like a form of indemnification, but does not absolve the seller of responsibility for the debt.

I would consider adding loss of rents coverage.

On the positive, your losses are light. 

First of all, there’s a difference between “loss of profit” and “loss of principal/original amount invested.”