It makes little sense to keep the property in Dallas since it's producing practically no cash flow.

Hey Hanzel,Multi families are great wealth producing investments and also very long term.

He individual investor should optimize and choose the trade offs that produce the best results (results meaning more than just financial) with the least risk.  

Here the IRS has a reason to challenge your credibility and the credibility of your self-produced numbers.

If that is ignored, you could file suit and in the discovery process you could compel them to produce financial statements.

Like someone else mentioned, if you took concessions for the issue they will produce the documentation and get your case thrown out.You can pursue an as-is sale, make sure you disclose this issue.

-------------I'll keep soaking up the content he produces, and also look into other sources to learn more about subto and how to set up seller financing that have been recommended by users on these forums.

It might help you out if you're a hammer swinger type guy who can produce workmen like quality results versus homeowner DIY results.Someone who has been in this business for awhile , and brings a lot more knowledge , and contacts to the deal we'll have a lot better chance at performing a turn around on the property then to someone who is new and inexperienced. 

that sounds good in theory, shows great innovation on the part of the OP, but has a huge risk in practice.  

Obviously, we will need to file a 1065 and produce K-1s.