It was outlined with penalties on me, recourse, obligations on me, and if I chose to sell, they'd get a % of the sale. 2) Use an Attorney - Here's where I'm kicking myself in the leg.

Lock in that low interest, 30 yr note and see where you stand after 2 years.Financing option: seller financing, subject to, wrapsNothing wrong with option #1 if the numbers make sense.

However, only your accountant knows all the facts and the sale may potentially not be subject to the $3,000 annual loss limitation if it is a section 1231 / 1245 / 1250 asset.Furthermore, many taxpayers think they have a loss when in reality they have income(they forget to reduce the basis by the accumulated depreciation).In addition, you may have suspended passive losses that may be released upon sale.

I'll add some red-neck talk for the white-collar folks who have made a comment on this subject.

It's so subjective (what someone considers major vs light rehab, and the areas you could buy in) that it's hard to nail down a specific number for you on that without narrowing down several things.4) Depends on where you are looking. 

Are the subject properties actually in the wave of gentrification or are you pushing the line by a number of blocks?

Pardon my unfamiliarity with the subject, I guess I just always assumed it was hard and fast to stay at 50%.

Prior to closing get an estoppel letter from the tenants outlining the lease terms, deposits, verbal agreements.

You are right about communicating real estate laws in your state - that's useful to lots of people and I appreciate you bringing up the subject. 

I am looking for experienced investor friendly attorneys to work with on Subject To, Owner Financing, and lease option deals in New York area.