I cannot imagine that you could get the 2nd mortgage holder to agree to any low percentage settlement if they are aware that your intend to carry on paying 100% of the 1st mortgage, and I would be surprised if any enforceable contract could be made with the 2nd Mortgagee without reference to the Sub 2 of the (ongoing) Mortgage 1.  

All I'm saying is if real estate investing is something your set on go for it!

Its an ongoing battle. 

I plan on going every month and you should too. 

I ran the numbers like you said Kyle using several different scenarios, like 3% Fannie Mae and 5% 203K loan.

Meh.......Not perfect since I suppose a full on go getter would try to make it work to talk ASAP.Would not really have ruffled my feathers at all.  

I ran a background check on him, all was fine, seemed like a nice guy, pays on time. 

Can someone point me to the right direction on what needs to be done in terms of IRS tax purposes on going forward basis. 

Thank you Manesh, definitely planning on going to our local REIA here.

Shoddy rehab means a lot of ongoing maintenance means a lot of cash out.