Account Closed, if it's that good of a deal then consult a cpa on your own.  

Great question and unique scenario, I'd likely consult a foreclosure attorney on this one.

Be careful, consult a local real estate specializing attorney to draw up the documents. 

By profession, I am a management consultant and currently consult IT and marketing companies to improve their project management capability and deliver programs & projects.

Consult with a CPA of course, but I don't provide daily services such as breakfast or housekeeping, so as far as we're concerned it's passive.

After consulting with the BP community, an attorney, and my agent, I decided that it would be best to walk away from the "deal."

Tell them that you can no longer pay (don't stop paying on the mortgage without consulting a lawyer) and you need to get that adjustable rate loan down to a manageable fixed rate.

Either consult a qualified accountant or read up on that subject elsewhere on this site and do it yourself.If you discover that you are losing money, or that you are not getting PAID ENOUGH to deal with problem tenants, then simply move on to a better investment.Your money certainly won't care, and you may discover that sleeping well through the night is a very satisfactory result.

The other is to have your own holding or top level LLC that would be the member/owner of subordinate LLC's that would hold Title or be the Mgt LLC.Anyway, consult a qualified professional or two. 

But I seem to recall that in a case like there, where you're selling inventory rather than an investment, that the profits must be recognized when you sell, even with an installment sale.You really want to consult with your accountant.And realize that there is nothing illegal about selling a house with a wrap, regardless of the loan terms.