The real value for me is that I can take that 80k and buy 10 more homes (my typical out of pocket is 4 to 7k - but lets just say worst case its 8k).  

Also, check with the HOA if there is one, maybe costs are going up either with the monthly association fees, there's a big special assessment coming up or worst yet they could be changing the rental rules not allowing short term rentals.

That was the worst part.

And that is not the worst diversification plan I've ever heard.  

Borrowers see what a property can be and lenders see worst case.

Worst scenerio, they stop paying, you foreclose and get the house, although you may not want it, you could probably sell it and at least get your money out of it since most of these are in the sub $20,000 range.

Worst case scenario is he backs out and you move on to another deal if you dont feel like going to court. 

Even in your worst case scenario, you would pay taxes on the difference between the purchase and sales price, but you should also be deducting obvious expenses like repair costs, etc...and only paying taxes on the final profit.If you have an LLC acting as an S-corp, you would pay taxes on your profit at your ordinary income tax rate, whatever that might be. 

It also has the lowest range of HAI, so these ppts to the worst represent more relative movement in SF.

Now I sold it on a lease option in which it is due by july 1st so with the bank saying that they are going to foreclose my worst option is to get the people to buy the house with the lease option but I dont think they have improved their credit enough.