With depreciation and tons of mortgage interest and property taxes you’re probably paying, you’ll most likely show a loss on the property for awhile and not have to pay taxes.

12 months is too long, I'd give a 3 month feasibility period with hard money down.

The guy left holding the bag would have the right to go after the other dead beat roommates to recover any of his losses.

If on refinancing he takes a loss that's his loss to take just as if he made a gain it would be his gain to keep.

Gross income @ $480 per unit and no rental loss is 115k. 25k/115k= 21% expense.

@Steven Torok - since an LLC is only a legal hedge of protection it doesn't offer any tax benefits since it acts as a pass through entity.You'll be paying income tax on any profits that your rentals show, regardless of what you do with the money (whether you buy more real estate or a Porsche).However, if you refinance the properties, you can often show a loss for each rental property after depreciation/taxes/mortgage/expenses.

The mentality of wont take a loss is great in theory but a small loss on one deal to take the money and buy another deal where you will make money is the smarter play.

Terms like Additional Insured, Additional Interest, Loss Payee, etc could apply depending on the scenario.  

This is a big loss for the property owner and also a huge hassle for the tenant. 

ultimately any gain or loss will be split 50/50 between you two.