If your money was cheaper then that would really help the cash flow which means it could be a deal.All in all as you described it, it looks like a no deal to me.

I'd feel differently if they just placed the tenant or had not received adequate compensation but that is not what is described here.  

@Jeff CaravalhoThe payment schedule should also be described in the loan policy.

LaDawn - I am sorry to hear about the mess- unfortunately what you are describing is pretty common when it comes to divorces.My understanding is that Texas is a deficiency state - meaning if the auction brings in less than what you owe the bank can still come after you for the difference.  

After 10 years as a broker/manager I have never heard of a fee structure as described above, but perhaps some other BP gurus will have some creative solutions if you decide to stay with a PM. 

What you are describing as a "flaw" isn't a flaw...it's a restriction or limitation based on the market you are investing in.  

It sounds like there might be waiting lists to invest with the top sponsors you've described.

:)I'm definitely no lawyer Mike but just from way you describe it, feels like you could be best served creating a new 3rd entity and do a joint venture together as equity partners in that new company.

Likewise, many investors don't know how to, or don't care to, educate the realtor, like @Brian Garlington describes (love that, btw!).  

Specifically, I'm looking at a setup very much like what is described in This IRS Publication In fact, this wording in the IRS publication is effectively (similar, but a little different)what we are planning to do: "Development Corp., a real estate developer, is a partner in a low-income housing partnership.