I sleep better with equity in the properties and cash on hand...

We still want to buy the property but my nerves are getting the best of me and I can't sleep thinking about if I making the right decision.

And in this tight housing market, many buyers are desperate so will overlook this red flag.But at the end of the day, if you sleep at night is all that matters.

Don't sleep on bandit signs for buyers and sellers, it still works.

You need it to sleep / eat so you can make money.

Omitting information like that on a loan used for any federally back financing is considered federal bank fraud, along with wire fraud and fraud in the inducement and a couple of other things.When someone lends you money, they have a right to know how risky it is to lend to you.Always be honest, you'll sleep better at home than in a cell. 

I think the long term risk is too high for me to sleep at night.

Having tenants sleep above an unfinished basement with lights makes me nervous.  

This causes them to overheat and causes most fires in cold weather.ALWAYS UNPLUG electric space heaters when sleeping and when you are not at home.

Every time you go to sleep at you will be thinking about what else is going to happen with the property or what call you will get.If caps are strong now but you deal with this a year and get frustrated and then want to sell but your market is not as hit you will have lost value.I know many owners upside down on mortgages and simply have to grind things out and do not have a choice like you do.