And, even if you are cash flow negative by living in one unit, as long as that monthly loss is less than you would be paying in rent elsewhere, you are still netting ahead.

Just some food for thought:I think you're going to be in a similar boat on many properties...it's going to be a real unique property that you can get into with a low-down, Owner-Occupied loan that has the opportunity to drive enough value to pull money out while generating enough rents to cover the new, higher loan amount.

I'm betting the really successful Airbnb properties are stand alone properties (the owners are not living in them) and with the loss of revenue it may make sense to sell and conserve cash.

We can sustain 20% in loss rent indefinitely.

It’s not called “passive loss”.

Plenty of people are on Cradle to Grave Welfare, Section-8, free healthcare, etc...There are programs in place to handle this, but in many instances the wait times are too long to be of any real help.If it gets bad enough FEMA will step in and provide food and shelter as they did in Hurricane Katrina. 

Especially in this economic climate, nothing will happen except for loss of deposit. 

But, if you're not confident that you know where values are headed, and aren't prepared to take the risk of having to hold a property long-term (or take a loss), it's probably better to wait.

Operating costs are much lower which offset the loss in revenue; I find that many of my properties cashflow better this way.

As the wholesaler, do I or Steve contact the Bank of ____________ to validate the agreement / I imagine the bank would prefer taking a small loss as opposed to foreclosing and incurring significant legal and management costs.