Because our note provided clear terms for disengaging ourselves from the situation, we were able to calmly come to a mutual beneficial situation, even if we were not able to continue the investing relationship on that particular property.

While you might have gotten some sympathy from zoning if you had been calm and logical about it, overstating a tree company as a "logging operation," calling the trucks earthquake machines, and making it sound like a grapple truck was destroying the building nust by running probably made the zoning guy think you were exaggerating about even the true parts of the story. 

The calm demeanor evident in the application process soon vanished. 

Keep calm, and RE on!

This is called a waterfall- and the manager can have an incentive based on performance and after certain hurdles are met and original equity is paid off. 

We can let this market calm down before taking the next step. 

This may calm things down a little and make the process go faster and a lot smoother.Of course, it's always a good idea to consult with an attorney, but the fastest and easiest way is to make the tenant delighted, and with cash, they could leave your property.

Most recently, I found examples of waterfall Excel models, which will be very helpful for a current valuation. 

Once they call I try to calm them down and go from there. 

To be honest, if it was 85K and then the waterfall wasn't so lob-sided (or if he was the one managing the property), I would not feel so uncomfortable.