Obviously it's bad news with any rental situation but I believe it could be much worse if you share the same home. 

@Andrew Taylor you are correct in that in an emergency situation you can enter the property.

the 70% rule allows you to have 10-20% profit, depending on situations.

I need advice on how you would handle a situation where an early property liquidation had to occur for whatever reason.Scenario:Partnership deal - I found this particular property, manage it, and carry the financing obligation.  

Yes, I understand the need for attorneys in this situation but since attorneys do charge by the hour, I would rather rely on any advice I can glean for free for the first part.

It would be higher interest but that would likely not be that long from the sounds of your situation.

In general, What is the reason a property owner would allow 1 property to go short sale and why would a lender do it in this situation? 

For my personal situation and goals this deal makes plenty of sense, but it’s not for everyone.

I would reverse engineer your situation.  

CAPEX should cover some of it if you budget well. but like others have mentioned if financed, You WILL have to get insurance in all situations