I think you have to warn him first by providing a plausible solution, which is beneficial to both of you, where you do take some hit, about what you are willing to do and what you will be forced to do if that plan doesn't work.

@Eric Johnson I use Cbrowne, they are okay because they have a pretty good contract with an escape clauses and beneficial to the owner.I am big "the contract says this, so..." it works for me when they arent doing things right.

What I have felt has been beneficial are Broker Opens.

If done right, it is very beneficial.

Direct writers (Allstate, State Farm, Farmers, Nationwide, Liberty Mutual, etc) are usually not a good fit for real estate investors.

Many investors use a property for the ease of transferring the property that is in the land trust, because the beneficial interest in a trust can easily be transferred with only a signature and the assignment does not even have to be notarized to be legal.

Is staying with your 401k's and mutual funds the best way to retire?

It would have been much more beneficial to be upfront about just getting started and lay it out there.

I know this is not the way it works, but can someone help explain why negotiating the price then doing "due diligence" would be beneficial in this particular case?

We call it portfolio averaging where your new properties purchased as a whole if you buy right will help your overall total return be positive.The stock and mutual fund markets have the notion of "dollar cost averaging"; basically, you invest the same dollar amount repeatedly on some exact dates, the idea being some days you will be buying high and some days you will buy low, but on average somewhere in between.With real estate, this is not always feasible due to the high buy in costs, because under "dollar cost averaging" you aren't selling to buy the next.But you can certainly buy new properties with higher cash flow to offset the ones with negative cash flow if you so choose.