Typically, if you only own one or two properties, all your other expenses (maintenance, mortgage interest, property taxes, DEPRECIATION), tend to outweigh your gross income so that your actual net that flows down to your personal tax return is a loss and not a gain.In that case, you get to deduct up to 25k a year in losses (or all of it if you're a real estate professional).Now if your houses are still cash flowing after all those expenses and your LLC really does have a net gain for the year, then that net gain is going to be treated as income to be taxes by the IRS at the end of the year.

Have you developed your investment mode, where your model calculates the Inputs of the investment (cash and time), the Actions (buy outright, down payment for a mortgage, income versus expenses) and the Outputs (profit or loss). 

The lender filed a claim with FHA to be reimbursed the loss of $50,000.

Most likely the buy and build out process works fine but if something goes wrong in the middle of it. your quite vulnerable to loss in this scenario. 5. they are marketing over seas  and those investors are not as intuned as most US investors about what a good deal is what a good neighborhood is etc etc.

You already got $400 that he didn't owe you, I'd be happy/cut losses and move on.How much will this cost to repair versus cost to sue?

The process was pretty typical for loans I've done in the past, except I was actually asked to provide a Profit & Loss statement for the current year to date.  

I would say just cut your losses and start over in FL.

Otherwise, the balance due will just continue to grow.Otherwise, consider a Cash-for-Keys surrender to get possession back with minimal losses (ie balance still outstanding).

So while we have a  quicker eviction process to hopefully limit a landlords losses collecting for damages is difficult at best 

We will pay no more for loss of, or damage to that property than the proportion that the Limit of Insurance under this Coverage Part for the property bears to the Agreed Value shown for it in the Declarations.b.