To qualify for non-recourse commercial loans through Fanny and Freddy you have to have equal new worth to the loan amount and 10% liquidity. 

Generally, a loss can only be claimed in the tax year when the investment becomes completely worthless or when there is a final determination that no further value will be recovered.If the REIT has officially liquidated, been declared insolvent, or issued a final report confirming that no additional distributions will be made, you may be able to claim the loss on your 2024 tax return.

If your goal is to maximize liquidity for future deals, reducing your cash outlay or exploring refinancing options could make sense.

Because I still have that equity and if I were to liquidate it I would be better off.

Make no mistake, shifting a "big war chest" from liquid investments and cash into a cash flowing real estate portfolio is not a passive endeavor.

.- Strategic Partnerships: Building direct relationships with REO asset managers, bankruptcy attorneys, and bank liquidation teams can provide exclusive access to bulk sales before they go public.- Bulk Purchases & Portfolio Acquisitions: Banks and hedge funds often look to unload non-performing assets in bulk.

It is something you don't want to try if you are not sure you have the liquidity to make this happen.

I wouldn't take that money to buy him out I'd liquidate and move into better asset class like extended stay development or 3 story walk up apartments 

I would keep it in a high interest bank account might as well earn as much gain as you can no matter how small it is.However I think some debt pay down would be great not to the point where you are not liquid enough to Jump at another opportunity or can’t make a major repair when it arise.

This^^^^^Unless he is loaded with cash reserves and can take a loan out based on his liquid reserves.