means deeding it back to the lender if they will accept it.. easier said than done they may want you to sign a prom note for any loss they could incure.. the thing to do is get the best cash offer you can then ask bank to do short sale if you dont have enough cash or equity to sell . 

If I assume a 1.25 ratio, this scenario would allow me recover more capital than a conventional mortgage.Please let me know your thoughts.

No one I know is going anywhere to report their loss so you can research it.

I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses.

Let's analyze each issue you've mentioned:1) Tenancy Length: besides issues a landlord can't control, like death, sickness, job loss, etc., the actual management of the property & tenant play a large roll in how long tenants stay in their home.

All cash costs, and negative CF is a loss, must be recovered before you can make a profit. 

Sometimes it's best to cut your losses and move on.

There are some accumulated passive losses but not much.

What he does not know yet is that selling even with a loss, is not going to be easy either.You don't need to make all your money on your first deal.

Can you sell without a large loss?