Or just looking to offset the loss?

Short term, leaving financing in place during rehab prior to resale — great strategy with limited risk to either party. 

I then recoup any losses in the resale and down payment forfeiture.

My initial thought is that the developers may have gotten a much better deal than they would have otherwise given the clear limitations on the land's use.

Add the difficult exit and your investor pool is very limited. 

Although we try to limit our Hard Money as much as possible due to the cost.

Second, you don't want to operate at a net loss, it's money out of your pocket every month and essentially negates your equity gains over time.

I am not a rookie investor, and probably have taken enough Losses since 2001 to make most of you quit. 

It's not just the taxes, but being able to at-a-glance look at expenses by the month and year, profit and loss calculating automatically, and even cash flow by property and total portfolio by month and year.Thanks for suggesting it!

Our last deal we engaged a mortgage broker that also brought a Private Equity LP (Limited Partner) to the deal.