I am always looking to reduce my tax burden, if theoretically I could reduce my tax liability to zero, that would make me 30% more profitable at the bottom line. 

Without the borrower willing to participate in a short sale, you have No chance of getting a reduced pay off, assuming this is a traditional lender/mtg.

You can reduce that risk with serious research on your market; studying market cycles, the attitude of the city regarding growth, master plans, jobs expected or know to be coming to the area.

If someone else sends it to a Tax Deed auction, you get paid back plus your interest.If you want to force your Certificate to get paid back, you have to pay off all the other certificates, and send it to a public auction.

However, lenders construct second mortgages as either home equity lines-of-credit (HELOCs) or shorter term, higher interest rate, full disbursement mortgages for homes.When selling a home, a second mortgage, regardless of the homeowner's use of the funds, reduces the seller's cash received at the closing of the sale.

Half Bath: This is basically the same as the bathroom category except reduced down to vanity, faucet, flooring/tile, setting material, toilet/connections, light fixtures and Misc.

However you can reduce the risk to almost nothing with proper knowledge. 

You can look most of that up, since it is public records!

However there are lots of creative ways to finance that can help reduce that. 

Ultimately though, I want to reduce my involvement, so less doors with higher cash flows means less headaches.