With all idle funds and cashflow hitting that balance, it creates a large snowball effect where both the outstanding balance and interest cost are dropping rapidly.

Regarding taking a 401k loan and then purchasing the property in your own name: You would have to confirm that your 401k plan allows for a 401k participant loan (and that you have not had an outstanding loan in the last 12 months).If yes, you can borrow up to 50% of the balance not to exceed $50,000.The repayment terms are equal monthly/quarterly payments (as you prefer) of principal and interest (e.g. prime + 1%) spread over a 5 year term (or longer if you will use the loan to purchase your primary residence).

The numbers will tell the story on who's naughty and who's nice.Interview the fire inspector and chief building inspector to ensure the property has no outstanding violations.

If they do bring up some outstanding costs or maybe the fact that they gave notice and now have nowhere to go, I'd recommend the owner make them an offer for their trouble.Maybe one month rent?

At some point we will likely transition to true MF but we know our niche well and it has produced outstanding ROI for us. 

The Current year taxes will always be outstanding....right now 2019 will also be due at the end of the year.

Do a little research as to why the property is in a tax default, check with the court house records on out standing mortgage or liens and don't forget the dept of health.

* option 1: hold cash    * this is just cumulative cashflow that you save up (add up cashflow every month)    * counting cash balances in net worth, this increases net worth by amount of cash saved every month (call it x)  * option 2: throw cash flow at principal on mortgage    * this decreases your liabilities (mortgage balance) by the exact amount that you would have increased your net worth by holding cash    * decreasing liabilities by x is same as increasing net worth by x, since net worth = assets - liabilities      * so at this point, we are in same spot (net-worth wise) as option 1      * however at this point, you have a lower outstanding loan balance which means that you will accrue less interest in the next month        * interest is technically a liability, even though it is a good liability in the inflationary environment that we have now      * therefore, above and beyond option 1, we are also decreasing our liability every month (monthly mortgage payment will stay thesame contractually, but mortgage will be paid off faster so there will be many terms of a $0 payment)        * decreasing a liability by y increases your net worth by y, therefore option 2 increases your net worth by x + y, whereas option 1 increases your net worth by x only* when looking at it from the initial condition of already having the asset and cashflow, it is like you are investing your excess cash in reducing your mortgage and getting a return of 3% on cash invested as opposed to just consuming your cash flow* this seems to be like investing profits for a 3% return, which would be like a conservative bond yield* I think it might make sense to invest in a stock-market index fund at 7-10% during the interim (except that you take on more risk and will pay taxes), until you have enough for a down payment that you can pull out and reinvest in more property  * of course, when reinvesting into paying down mortgage, there are no capital gains and also no risk, so that might make it just as good to do that* the short answer I think is that you are either using your cash flow (from previous real estate, stocks, job, or whatever) to consume (spend on stuff you want that keep net worth same or decrease it, but not make you more cashflow) or spend that cashflow on things that increase your net worth and/or pay you cash flow  * then paying down a mortgage that reduces payments by 3% is like buying a bond that returns 3% with no taxes (because overpaying a mortgage isn't taxed, and bond yields are) * continually doing this is like funneling your excess profits from other stuff back into your 3% tax-free bond-yield* the problem is that you lose this avenue when the loan balance actually hits $0, which is why long before this point, you actually refi, take out enough for a down payment to get another re investment working in parallel, then use both mortgages on properties as tax-free 3% bond yields (taking out another mortgage introduces a compounding effect here as well, beyond the 3% return)  * this would be like selling your bond portfolio with no capital gains taxes (bc refis/loans are tax-free, even though you pay some closing costs), buying as much re as you can with down payments, and "buying more bonds - which are actually your mortgages" such that your bond portfolio increases (because your LTVs on mortgages are higher) and you magically get a house out of the deal (and did I mention no taxes) * then rinse repeat* long-story short, I think that it might actually be a next-level genius strategy, after all* this is either the smartest thing I've heard in the past year or I'm completely chasing my tail* can someone poke holes in this?

I'm wanting to amortize the outstanding loan balance, but over how many years?   

They have enough to pay the outstanding mortgage balance but not enough to cover my down payment (10%) and any appreciation.