Compounding that risk with hard money lending can very quickly lead to losses, and it sounds like you have enough going on that you cannot sustain a loss. 

It applies to just about everything including mortgages.StephanieNot sure why some of you come off as so defensive.

There is the other side to just compounding a good return after good return after good return versus trying to knock it out of the park every time and having one great return followed by a not so great one, followed by a loss...

3. if things get really worse, they play it really nasty and sue me about the mold. how could i defense myself.Answers and experience are highly appreciated.

There is the insolvency defense, though.

I understand that future capital improvements would be depreciable but if none of the value of the existing infrastructure can be applied towards the basis, it obviously changes my after-tax returns significantly. 2)  If the answer to question 1 is no, can I effectively create a defensible basis by getting a cost segregation done that breaks out the true value of the infrastructure or, would the appraisal suffice since the appraiser would presumably provide a breakout of the infrastructure value?  

I am a criminal defense attorney in Southern California so I needed to cross examine him in person.  

We are hoarding cash, shifting from offense to defense by pausing evictions and doing zero-increase renewals to save NTVs. 

However, people who made bad note investors don't get bailed out by capital appreciation; their mistakes are compounded by their lack of control over the property, by a court system that assumes the note holder is a bad guy and the borrower a victim; by foreclosure laws requiring a note holder to jump through loops and pay huge legal fees to repossess a property for non payment, by not obtaining title insurance and discovering that their are superior liens on the property, by note sellers who provided incomplete or misleading information, etc.  

Stocks have done great this year, but over the long term, the DJI average is around 7-10% compounded rate of return.