@Shawn Questa I agree with you that there could be some opportunity here, but personally, with that little equity in the property, I'd wait for the pre-foreclosure process to start and  perhaps you can do a short sale (though I don't know the details on how that's handled in TX).

Due to item 1, adding an ADU can require years to start achieving any return (once the accumulated cash flow recovers the initial negative position).4) Adding an ADU is a slow process.

Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc.

Then you put another portion of your mortgage on the HELOC and repeat the process. 

If  you chose to sell, there are a couple things you could do to proactively make the 1031 process much easier. 

Neither do I, thats why i was asking the process :) Any education you have on Sub To?

. :)We definitely want to invest in true vacation rentals as well but this will be a good learning process with not as much risk to start.  

For example, with our private investors, we always ensure that deals are secured by real assets and provide full transparency throughout the process.

Evaluate the situation to see if you could have done anything differently to mitigate the loss and implement changes to your processes, but know that this happens and hoepfully just not too close together. 

The seller is out of state and even visited the project a few times to check on the progress which I think helped him feel good about the whole deal as well. technology made the whole process a lot easier in the interim.