What we're struggling to understand is how to underwrite/estimate the paper losses that a MF would produce and IF this strategy is worth it from an income/tax savings perspective.

The property is important to us, and the numbers mustshow the deal will produce a fair profit, but as direct lenders (i.e., we lend our own money) we always bet on the borrower first.

A smooth sea never produced a skilled sailor (Franklin D.

Just want to clarify how you got there, to get to $12K you divided 1.2M by 100 lots (of which 60 has homes on them and producing rent, 40 lots are vacant). 

There is no way a PML will wait that long to get all their money back if your property on produced 250 a month.

Sellers and agents often inflate prices based on potential income, but like you said, you want to base your investment on what's actually being produced right now.

And I want to rent out their home to produce cash flow with low interest rate, which they have. 

A perfect example from my day today, lol, I showed two homes, 2-bed A-frames next to one another, one was producing 120k, the other under 70k (Both with views).

That company supports foreclose bidders they produce a document daily on all the sales with same info I mentioned above and color coded certain props with extra caution Red or Green for ready to go bid with confidence. although this created uber competition. 

They should be using a net rental income analysis which would produce an income figure specific to each property based on your reporting on Sched E.